UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
 xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the quarterly period ended June 30, 2018March 31, 2019
or
 oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-6686
ipglogo2018a02.jpg
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-1024020
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)

909 Third Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
(212) 704-1200
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý Accelerated filer ¨
Non-accelerated filer ¨ Smaller reporting company ¨
(Do not check if a smaller reporting company)   Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨    No ý

The number of shares of the registrant’s common stock outstanding as of July 16, 2018April 15, 2019 was 383,785,420.387,039,011.

INDEX
 Page
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited)
 
 
Consolidated Statements of Operations for the Three and Six Months Ended June 30,March 31, 2019 and 2018 and 2017
2
 
Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30,March 31, 2019 and 2018 and 2017
3
 
Consolidated Balance Sheets as of June 30, 2018March 31, 2019 and December 31, 20172018
4
 
Consolidated Statements of Cash Flows for the SixThree Months Ended June 30,March 31, 2019 and 2018 and 2017
5
 
Consolidated Statements of Stockholders’ Equity for the SixThree Months Ended June 30,March 31, 2019 and 2018 and 2017
6
 
Notes to Consolidated Financial Statements
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2722
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
4035
Item 4.
Controls and Procedures
4035
   
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
4137
Item 1A.
Risk Factors
4137
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
4237
Item 6.
Exhibits
4237
INDEX TO EXHIBITS
4338
SIGNATURES
4439
INFORMATION REGARDING FORWARD-LOOKING DISCLOSURE
This quarterly report on Form 10-Q contains forward-looking statements. Statements in this report that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or comparable terminology are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K and thisour quarterly reportreports on Form 10-Q. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:
potential effects of a challenging economy, for example, on the demand for our advertising and marketing services, on our clients’ financial condition and on our business or financial condition;
our ability to attract new clients and retain existing clients;
our ability to retain and attract key employees;
risks associated with assumptions we make in connection with our critical accounting estimates, including changes in assumptions associated with any effects of a weakened economy;
potential adverse effects if we are required to recognize impairment charges or other adverse accounting-related developments;
risks associated with the effects of global, national and regional economic and political conditions, including counterparty risks and fluctuations in economic growth rates, interest rates and currency exchange rates; and
developments from changes in the regulatory and legal environment for advertising and marketing and communications services companies around the world.world; and
failure to realize the anticipated benefits on the acquisition of the Acxiom business.
Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our most recent annual report on Form 10-K and thisour quarterly reportreports on Form 10-Q.

PART I – FINANCIAL INFORMATION
Item 1.Financial Statements (Unaudited)
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)
Three months ended
June 30,		 Six months ended
June 30,		Three months ended
March 31,
2018 2017 2018 20172019 2018
REVENUE:          
Net revenue$1,948.2
 $1,834.6
 $3,722.2
 $3,509.9
$2,004.8
 $1,774.0
Billable expenses443.6
 351.2
 838.7
 739.7
356.4
 395.1
Total revenue2,391.8
 2,185.8
 4,560.9
 4,249.6
2,361.2
 2,169.1
          
OPERATING EXPENSES:          
Salaries and related expenses1,292.9
 1,228.9
 2,623.2
 2,480.6
1,421.1
 1,330.3
Office and other direct expenses333.3
 318.4
 657.1
 631.1
389.2
 323.8
Billable expenses443.6
 351.2
 838.7
 739.7
356.4
 395.1
Cost of services2,069.8
 1,898.5
 4,119.0
 3,851.4
2,166.7
 2,049.2
Selling, general and administrative expenses28.8
 20.3
 63.9
 55.5
41.4
 35.1
Depreciation and amortization44.0
 41.3
 90.0
 82.3
71.1
 46.0
Restructuring charges31.8
 0.0
Total operating expenses2,142.6
 1,960.1
 4,272.9
 3,989.2
2,311.0
 2,130.3
          
OPERATING INCOME249.2
 225.7
 288.0
 260.4
50.2
 38.8
          
EXPENSES AND OTHER INCOME:          
Interest expense(26.1) (25.7) (46.0) (46.6)(49.8) (19.9)
Interest income4.7
 4.7
 8.7
 9.9
7.8
 4.0
Other expense, net(16.3) (15.4) (40.7) (14.6)(6.9) (24.4)
Total (expenses) and other income(37.7) (36.4) (78.0) (51.3)(48.9) (40.3)
          
Income before income taxes211.5
 189.3
 210.0
 209.1
Income (loss) before income taxes1.3
 (1.5)
Provision for income taxes63.6
 81.6
 76.3
 81.3
10.5
 12.7
Income of consolidated companies147.9
 107.7
 133.7
 127.8
Equity in net (loss) income of unconsolidated affiliates(0.1) (0.1) (2.0) 1.1
NET INCOME147.8
 107.6
 131.7
 128.9
Net (income) loss attributable to noncontrolling interests(2.0) 0.1
 0.0
 3.5
NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS$145.8
 $107.7
 $131.7
 $132.4
Loss of consolidated companies(9.2) (14.2)
Equity in net loss of unconsolidated affiliates(0.3) (1.9)
NET LOSS(9.5) (16.1)
Net loss attributable to noncontrolling interests1.5
 2.0
NET LOSS AVAILABLE TO IPG COMMON STOCKHOLDERS$(8.0) $(14.1)
          
Earnings per share available to IPG common stockholders:       
Loss per share available to IPG common stockholders:   
Basic$0.38
 $0.27
 $0.34
 $0.34
$(0.02) $(0.04)
Diluted$0.37
 $0.27
 $0.34
 $0.33
$(0.02) $(0.04)
          
Weighted-average number of common shares outstanding:          
Basic383.6
 392.3
 383.5
 392.0
384.5
 383.4
Diluted389.5
 400.3
 388.9
 399.6
384.5
 383.4
       
Dividends declared per common share$0.21
 $0.18
 $0.42
 $0.36
 
The accompanying notes are an integral part of these unaudited financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Millions)
(Unaudited)
 Three months ended
June 30,		 Six months ended
June 30,
 2018 2017 2018 2017
NET INCOME$147.8
 $107.6
 $131.7
 $128.9
        
OTHER COMPREHENSIVE (LOSS) INCOME       
Foreign currency translation:       
Foreign currency translation adjustments(116.4) 33.0
 (94.0) 85.9
Reclassification adjustments recognized in net income0.9
 0.7
 13.4
 0.3
 (115.5) 33.7
 (80.6) 86.2
        
Available-for-sale securities:       
Changes in fair value of available-for-sale securities0.0
 0.0
 0.0
 0.1
 0.0
 0.0
 0.0
 0.1
        
Derivative instruments:       
Recognition of previously unrealized losses in net income0.6
 0.6
 1.1
 1.1
Income tax effect(0.1) (0.2) (0.3) (0.4)
 0.5
 0.4
 0.8
 0.7
        
Defined benefit pension and other postretirement plans:       
Net actuarial (losses) gains for the period(1.4) 0.8
 (1.4) 0.8
Amortization of unrecognized losses, transition obligation and prior service cost included in net income2.0
 1.8
 3.9
 3.5
Settlement and curtailment losses included in net income0.0
 0.0
 0.2
 0.0
Other(0.5) (0.4) (0.4) (0.6)
Income tax effect0.2
 (0.5) 0.1
 (0.6)
 0.3
 1.7
 2.4
 3.1
Other comprehensive (loss) income, net of tax(114.7) 35.8
 (77.4) 90.1
TOTAL COMPREHENSIVE INCOME33.1
 143.4
 54.3
 219.0
Less: comprehensive (loss) income attributable to noncontrolling interests(0.1) 0.1
 (1.8) (2.8)
COMPREHENSIVE INCOME ATTRIBUTABLE TO IPG$33.2
 $143.3
 $56.1
 $221.8
 Three months ended
March 31,
 2019 2018
NET LOSS$(9.5) $(16.1)
    
OTHER COMPREHENSIVE INCOME   
Foreign currency translation:   
Foreign currency translation adjustments8.3
 22.4
Reclassification adjustments recognized in net loss1.2
 12.5
 9.5
 34.9
    
Derivative instruments:   
Recognition of previously unrealized losses in net loss0.6
 0.5
Income tax effect(0.1) (0.2)
 0.5
 0.3
    
Defined benefit pension and other postretirement plans:   
Amortization of unrecognized losses, transition obligation and
prior service cost included in net loss		1.7
 1.9
Settlement and curtailment losses included in net loss0.0
 0.2
Other(0.3) 0.1
Income tax effect(0.1) (0.1)
 1.3
 2.1
Other comprehensive income, net of tax11.3
 37.3
TOTAL COMPREHENSIVE INCOME1.8
 21.2
Less: comprehensive loss attributable to noncontrolling interests(1.6) (1.7)
COMPREHENSIVE INCOME ATTRIBUTABLE TO IPG$3.4
 $22.9

The accompanying notes are an integral part of these unaudited financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions)
(Unaudited)
June 30,
2018		 December 31,
2017		March 31,
2019		 December 31,
2018
ASSETS:      
Cash and cash equivalents$493.2
 $790.9
$630.5
 $673.4
Accounts receivable, net of allowance of $44.5 and $42.7, respectively4,247.7
 4,585.0
Accounts receivable, net of allowance of $40.1 and $42.5, respectively4,027.5
 5,126.6
Accounts receivable, billable to clients1,945.8
 1,747.4
2,077.4
 1,900.6
Assets held for sale19.6
 5.7
19.7
 5.7
Other current assets439.3
 346.5
491.9
 476.6
Total current assets7,145.6
 7,475.5
7,247.0
 8,182.9
Property and equipment, net of accumulated depreciation of $1,014.7 and $1,036.2, respectively602.0
 650.4
Property and equipment, net of accumulated depreciation of $1,061.6 and $1,034.9, respectively767.1
 790.9
Deferred income taxes261.0
 234.0
285.6
 247.0
Goodwill3,788.1
 3,820.4
4,885.2
 4,875.9
Other intangible assets1,074.5
 1,094.7
Operating lease right-of-use assets1,355.5
 0.0
Other non-current assets560.9
 524.4
435.1
 428.9
TOTAL ASSETS$12,357.6
 $12,704.7
$16,050.0
 $15,620.3
      
LIABILITIES:      
Accounts payable$5,738.8
 $6,420.2
$5,733.7
 $6,698.1
Accrued liabilities551.5
 674.7
663.6
 806.9
Contract liabilities510.8
 484.7
575.9
 533.9
Short-term borrowings757.6
 84.9
272.4
 73.7
Current portion of long-term debt0.1
 2.0
0.1
 0.1
Current portion of operating leases263.0
 0.0
Liabilities held for sale26.5
 8.8
22.4
 11.2
Total current liabilities7,585.3
 7,675.3
7,531.1
 8,123.9
Long-term debt1,282.7
 1,285.6
3,663.7
 3,660.2
Non-current operating leases1,223.6
 0.0
Deferred compensation445.4
 476.6
401.9
 422.7
Other non-current liabilities786.8
 768.8
713.3
 812.8
TOTAL LIABILITIES10,100.2
 10,206.3
13,533.6
 13,019.6
      
Redeemable noncontrolling interests (see Note 5)165.8
 252.1
161.8
 167.9
      
STOCKHOLDERS’ EQUITY:      
Common stock39.0
 38.6
38.6
 38.3
Additional paid-in capital1,022.9
 955.2
903.3
 895.9
Retained earnings2,076.7
 2,104.5
2,303.1
 2,400.1
Accumulated other comprehensive loss, net of tax(903.4) (827.8)(929.7) (941.1)
2,235.2
 2,270.5
Less: Treasury stock(173.5) (59.0)
Total IPG stockholders’ equity2,061.7
 2,211.5
2,315.3
 2,393.2
Noncontrolling interests29.9
 34.8
39.3
 39.6
TOTAL STOCKHOLDERS’ EQUITY2,091.6
 2,246.3
2,354.6
 2,432.8
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$12,357.6
 $12,704.7
$16,050.0
 $15,620.3
 
The accompanying notes are an integral part of these unaudited financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Millions)
(Unaudited)
Six months ended
June 30,		Three months ended
March 31,
2018 20172019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income$131.7
 $128.9
Net loss$(9.5) $(16.1)
Adjustments to reconcile net income to net cash used in operating activities:      
Depreciation and amortization90.0
 82.3
71.1
 46.0
Provision for uncollectible receivables6.1
 8.6
3.4
 2.1
Amortization of restricted stock and other non-cash compensation46.0
 46.0
28.2
 30.0
Net amortization of bond discounts and deferred financing costs2.7
 2.8
2.3
 1.4
Deferred income tax (benefit) provision(31.0) 9.5
Deferred income tax provision(31.0) (20.8)
Net losses on sales of businesses44.2
 12.2
8.6
 24.4
Other1.9
 10.2
13.1
 6.8
Changes in assets and liabilities, net of acquisitions and divestitures, providing (using) cash:      
Accounts receivable238.0
 769.7
1,088.4
 675.2
Accounts receivable, billable to clients(233.7) (165.5)(175.2) (220.7)
Other current assets(124.6) (84.5)(79.4) (88.3)
Accounts payable(579.3) (651.3)(961.3) (994.2)
Accrued liabilities(175.9) (313.9)(77.5) (164.6)
Contract liabilities38.0
 6.9
39.2
 17.6
Operating lease right-of-use assets70.0
 0.0
Non-current operating lease liabilities(62.4) 0.0
Other non-current assets and liabilities(11.8) (15.0)(21.5) (28.7)
Net cash used in operating activities(557.7) (153.1)(93.5) (729.9)
CASH FLOWS FROM INVESTING ACTIVITIES:      
Capital expenditures(61.5) (68.9)(32.8) (22.8)
Acquisitions, net of cash acquired(8.5) (12.6)0.0
 (0.2)
Other investing activities12.4
 (14.5)2.1
 (0.1)
Net cash used in investing activities(57.6) (96.0)(30.7) (23.1)
CASH FLOWS FROM FINANCING ACTIVITIES:      
Net increase in short-term borrowings669.3
 153.5
201.0
 718.8
Exercise of stock options7.0
 11.8
0.6
 6.9
Repurchases of common stock0.0
 (54.9)
Common stock dividends(161.2) (141.4)(90.6) (80.8)
Repurchases of common stock(114.5) (115.0)
Tax payments for employee shares withheld(28.0) (37.8)(21.2) (26.3)
Acquisition-related payments(16.0) (36.3)
Distributions to noncontrolling interests(10.6) (10.9)(2.5) (3.9)
Repayment of long-term debt(4.7) (23.6)
Other financing activities(0.3) 0.3
(0.6) (1.6)
Net cash provided by (used in) financing activities341.0
 (199.4)
Net cash provided by financing activities86.7
 558.2
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash(27.5) 8.2
(6.4) (2.9)
Net decrease in cash, cash equivalents and restricted cash(301.8) (440.3)(43.9) (197.7)
Cash, cash equivalents and restricted cash at beginning of period797.7
 1,100.2
677.2
 797.7
Cash, cash equivalents and restricted cash at end of period$495.9
 $659.9
$633.3
 $600.0

The accompanying notes are an integral part of these unaudited financial statements.

THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts in Millions)
(Unaudited)

 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Treasury
Stock
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
Shares Amount Shares Amount 
Balance at December 31, 2017386.2
 $38.6
 $955.2
 $2,104.5
 $(827.8) $(59.0) $2,211.5
 $34.8
 $2,246.3
Net income      131.7
     131.7
 

 131.7
Other comprehensive loss        (75.6)   (75.6) (1.8) (77.4)
Balance at December 31, 2018383.6
 $38.3
 $895.9
 $2,400.1
 $(941.1) $2,393.2
 $39.6
 $2,432.8
Cumulative effect of accounting change      2.2
   2.2
   2.2
Net loss      (8.0)   (8.0) (1.5) (9.5)
Other comprehensive income        11.4
 11.4
 (0.1) 11.3
Reclassifications related to redeemable
noncontrolling interests
              6.3
 6.3
          0.0
 2.6
 2.6
Distributions to noncontrolling interests              (10.6) (10.6)          0.0
 (2.5) (2.5)
Change in redemption value of redeemable
noncontrolling interests
    41.8
 2.9
     44.7
   44.7
      0.3
   0.3
   0.3
Repurchases of common stock          (114.5) (114.5)   (114.5)
Common stock dividends      (161.2)     (161.2)   (161.2)
Common stock dividends ($0.235 per share)      (90.6)   (90.6)   (90.6)
Stock-based compensation4.6
 0.5
 48.0
       48.5
   48.5
3.4
 0.3
 29.8
     30.1
   30.1
Exercise of stock options0.9
 

 7.0
       7.0
   7.0
0.0
 0.0
 0.6
     0.6
   0.6
Shares withheld for taxes(1.2) (0.1) (28.5)       (28.6)   (28.6)(0.8) 0.0
 (22.0)     (22.0)   (22.0)
Other    (0.6) (1.2)     (1.8) 1.2
 (0.6)    (1.0) (0.9)   (1.9) 1.2
 (0.7)
Balance at June 30, 2018390.5
 $39.0
 $1,022.9
 $2,076.7
 $(903.4) $(173.5) $2,061.7
 $29.9
 $2,091.6
Balance at March 31, 2019386.2
 $38.6
 $903.3
 $2,303.1
 $(929.7) $2,315.3
 $39.3
 $2,354.6
 
The accompanying notes are an integral part of these unaudited financial statements.
















THE INTERPUBLIC GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY – (CONTINUED)
(Amounts in Millions)
(Unaudited)

Common Stock 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Treasury
Stock
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
Common Stock 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated 
Other
Comprehensive
Loss, Net of Tax
 
Treasury
Stock
 
Total IPG
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Stockholders’
Equity
Shares Amount Shares Amount 
Balance at December 31, 2016394.3
 $39.4
 $1,199.2
 $1,839.9
 $(964.4) $(63.3) $2,050.8
 $39.6
 $2,090.4
Net income      132.4
     132.4
 (3.5) 128.9
Balance at December 31, 2017386.2
 $38.6
 $955.2
 $2,104.5
 $(827.8) $(59.0) $2,211.5
 $34.8
 $2,246.3
Net loss      (14.1)     (14.1) (2.0) (16.1)
Other comprehensive income        89.4
   89.4
 0.7
 90.1
        37.0
   37.0
 0.3
 37.3
Reclassifications related to redeemable
noncontrolling interests
            
 5.0
 5.0
            0.0 2.5
 2.5
Distributions to noncontrolling interests            
 (11.4) (11.4)            0.0 (3.9) (3.9)
Change in redemption value of redeemable
noncontrolling interests
      (3.4)     (3.4)   (3.4)      1.5
     1.5
   1.5
Repurchases of common stock          (115.0) (115.0)   (115.0)          (54.9) (54.9)   (54.9)
Common stock dividends      (141.4)     (141.4)   (141.4)
Common stock dividends ($0.210 per share)      (80.8)     (80.8)   (80.8)
Stock-based compensation5.5
 0.6
 47.3
       47.9
   47.9
4.4
 0.4
 30.3
       30.7
   30.7
Exercise of stock options1.1
 0.1
 11.8
       11.9
   11.9
0.8
 0.1
 6.9
       7.0
   7.0
Shares withheld for taxes(1.6) (0.2) (38.2)       (38.4)   (38.4)(1.1) (0.1) (28.0)       (28.1)   (28.1)
Other    0.1
 (0.8)     (0.7) (0.6) (1.3)    (0.7) (0.6)     (1.3) 0.1
 (1.2)
Balance at June 30, 2017399.3
 $39.9
 $1,220.2
 $1,826.7
 $(875.0) $(178.3) $2,033.5
 $29.8
 $2,063.3
Balance at March 31, 2018390.3
 $39.0
 $963.7
 $2,010.5
 $(790.8) $(113.9) $2,108.5
 $31.8
 $2,140.3
 
The accompanying notes are an integral part of these unaudited financial statements.

Notes to Consolidated Financial Statements
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)
Note 1:  Basis of Presentation
The unaudited Consolidated Financial Statements have been prepared by The Interpublic Group of Companies, Inc. and its subsidiaries (the "Company," "IPG," "we," "us" or "our") in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for reporting interim financial information on Form 10-Q. Accordingly, they do not include certain information and disclosures required for complete financial statements. The preparation of financial statements in conformity with U.S. GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported and disclosed. Actual results could differ from these estimates and assumptions. The consolidated results for interim periods are not necessarily indicative of results for the full year and should be read in conjunction with our 20172018 Annual Report on Form 10-K.
As of January 1, 2018, the Company has revised the presentation of its Consolidated Statements of Operations, which disaggregates net revenue and billable expenses within total revenue and separately presents cost of services; selling, general and administrative expenses; and depreciation and amortization within operating expenses. The revised presentation does not impact total revenue, operating expenses or operating income.
Cost of services is comprised of the expenses of our revenue-producing operating segments, Integrated Agency Networks ("IAN") and Constituency Management Group ("CMG"), including salaries and related expenses, office and other direct expenses and billable expenses, and includes an allocation of the centrally managed expenses of our Corporate and other group. Office and other direct expenses include rent expense, professional fees, certain expenses incurred by our staff in servicing our clients and other costs directly attributable to client engagements.
Selling, general and administrative expenses are primarily the unallocated expenses of our Corporate and other group, as disclosed further in Note 12, excluding depreciation and amortization.
Depreciation and amortization of the fixed assets and intangible assets of the Company is disclosed as a separate operating expense.
Restructuring charges relate to the Company's implementation of a cost initiative to better align our cost structure with our revenue, as discussed further in Note 9.
In the opinion of management, these unaudited Consolidated Financial Statements include all adjustments, consisting only of normal and recurring adjustments necessary for a fair statement of the information for each period contained therein. Certain reclassifications and immaterial revisions have been made to prior-period financial statements to conform to the current-period presentation.

Note 2:  SummaryRevenue
Disaggregation of Significant Accounting PoliciesRevenue
Effective January 1, 2018, IPG adopted Accounting Standards Codification Topic 606,We have two reportable segments as of March 31, 2019: IAN and CMG, as further discussed in Note Revenue13. IAN principally generates revenue from Contracts with Customers, ("ASC 606") using the full retrospective transition method. Under this method, the Company will revise its consolidated financial statements for the years ended December 31, 2016providing advertising and 2017, and applicable interim periods within the year ended December 31, 2017,media services as if ASC 606 had been effective for those periods. ASC 606 applies to all contracts with customers, except for contracts that are within the scopewell as a comprehensive array of other standards. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to contracts when it is probable that IPG will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are distinct performance obligations. We then assess whether IPG acts as an agent or a principal for each identified performance obligation and include revenue within the transaction price for third-party costs when we determine that we act as principal.
Revenue Recognition
We recognize revenue when the control to promised goods or services transfers to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. Our revenues are primarily derived from the planning and execution of multi-channel advertising andglobal communications and marketing services, includingservices. CMG generates revenue from providing events and public relations meeting and event production,services as well as sports and entertainment marketing, corporate and brand identity, and strategic marketing consulting around the world. consulting.
Our revenuesagencies are directly dependent upon the advertising, marketing and corporate communications requirements of our existing clients and our ability to win new clients. Depending on the terms of the client contract,located in over 110 countries, including every significant world market. Our geographic revenue breakdown is derived fromlisted below.
 Three months ended
March 31,
Total revenue:2019 2018
United States$1,535.1
 $1,350.7
International:   
United Kingdom206.2
 204.4
Continental Europe178.8
 181.7
Asia Pacific232.4
 231.5
Latin America89.3
 80.0
Other119.4
 120.8
Total International826.1
 818.4
Total Consolidated$2,361.2
 $2,169.1

8
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

diverse arrangements involving fees for services performed, commissions, performance incentive provisions
 Three months ended
March 31,
Net revenue:2019 2018
United States$1,314.1
 $1,092.3
International:   
United Kingdom170.3
 163.5
Continental Europe156.8
 158.7
Asia Pacific178.0
 178.8
Latin America80.3
 73.9
Other105.3
 106.8
Total International690.7
 681.7
Total Consolidated$2,004.8
 $1,774.0

IANThree months ended
March 31,
Total revenue:2019 2018
United States$1,210.1
 $1,023.2
International662.1
 662.3
Total IAN$1,872.2
 $1,685.5
    
Net revenue:   
United States$1,119.3
 $898.0
International591.9
 583.3
Total IAN$1,711.2
 $1,481.3

CMGThree months ended
March 31,
Total revenue:2019 2018
United States$325.0
 $327.5
International164.0
 156.1
Total CMG$489.0
 $483.6
    
Net revenue:   
United States$194.8
 $194.3
International98.8
 98.4
Total CMG$293.6
 $292.7
Contract Balances
The following table provides information about receivables, contract assets and combinations of the three.
Net revenue, primarily consisting of fees, commissions and performance incentives, represents the amount of our gross billings excluding pass-through expenses charged to a client. Revenues for the creation, planning and placement of advertising are determined primarily on a negotiated fee basis and, to a lesser extent, on a commission basis. Fees are usually calculated to reflect hourly rates plus proportional overhead and a mark-up. Contractual arrangements with clients may also include performance incentive provisions designed to link a portion of our revenue to our performance relative to mutually agreed-upon qualitative or quantitative metrics, or both. Commissions are earned based on services provided and are usually derivedcontract liabilities from a percentage or fee over the total cost to complete the assignment. Commissions can also be derived when clients pay us the gross rate billed by media and we pay for media at a lower net rate; the difference is the commission that we earn, which we either retain in full or share with the client depending on the nature of the applicable services agreement. We also generate revenue in negotiated fees from our public relations, sales promotion, event marketing, sports and entertainment marketing, and corporate and brand identity services.
Billable expenses include pass-through expenses related to event and advertising production costs for performance obligations where we have determined that we are acting as principal that are rebilled to our clients, as well as out-of-pocket costs. Out-of-pocket costs often include expenses related to airfare, mileage, hotel stays, out-of-town meals and telecommunication charges for client service staff. We record these billable expenses within total revenue with a corresponding offset to operating expenses.
Most of our client contracts are individually negotiated and, accordingly, the terms of client engagements and the basis on which we earn fees and commissions vary significantly. As is customary in the industry, our contracts generally provide for termination by either party on relatively short notice, usually 30 to 90 days. Our payment terms vary by client, and the time between invoicing date and due date is typically not significant. We generally have right to payment for all services provided through the end of the contract or termination date.
Our client contracts may include provisions for incentive compensation and vendor rebates and credits. Our largest clients are multinational entities and, as such, we often provide services to these clients out of multiple offices and across many of our agencies. In arranging for such services, it is possible that we will enter into global, regional and local agreements. Agreements of this nature are reviewed by legal counsel to determine the governing terms to be followed by the offices and agencies involved.
When we receive credits from our vendors and media outlets for transactions entered into on behalf of our clients, they are generally remitted back to our clients; however, they may be retained by us based on specific terms of our contracts and local laws. If amounts are to be passed through to clients, they are recorded as liabilities until settlement or, if retained by us, are recorded as revenue when earned.
For media contracts that can be canceled by the customer at any time without compensation, the contract does not exist until media airs, at which point revenue is recognized.
Timing of Recognition
We have determined that we generally satisfy our performance obligations over time, except for certain commission-based contracts, which are recognized at a point in time, typically the date of broadcast or publication. Fees are generally recognized based on proportional performance utilizing periodically updated estimates to complete.
Performance Obligations
Our client contracts may include various goods and services that are capable of being distinct, are distinct within the context of the contract and are therefore accounted for as separate performance obligations. We allocate revenue to each performance obligation in the contract at inception based on its relative standalone selling price.
Principal vs. Agent
For each identified performance obligation in the contract with the customer, we assess whether our agency or the third-party supplier is the principal or agent. We control the specified services before transferring those services to the customer and act as the principal if we are primarily responsible for the integration of products and services into the deliverable to our customer, have inventory risk, or discretion in establishing pricing. For performance obligations in which we act as principal, we record the gross amount billed to the customer within total revenue and the related incremental direct costs incurred as billable expenses. We have determined that we primarily act as principal for creative, media planning, in-house production, event, public relations and branding services, where we control the specified services before transferring those services to the customer because we are primarily responsible for the integration of products and services into the deliverable to our customer. We generally do not have inventory risk or discretion in establishing pricing in our contracts with customers.
 March 31,
2019		 December 31,
2018
Accounts receivable, net of allowance of $40.1 and $42.5, respectively$4,027.5
 $5,126.6
Accounts receivable, billable to clients2,077.4
 1,900.6
Contract assets63.3
 67.9
Contract liabilities (deferred revenue)575.9
 533.9

9
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

IfContract assets are primarily comprised of contract incentives that are generally satisfied annually under the terms of our contracts and are transferred to accounts receivable when the right to payment becomes unconditional. Contract liabilities relate to advance consideration received from customers under the terms of our contracts primarily related to reimbursements of third-party supplier, rather than IPG, is primarily responsible for the integration of products and services into the deliverable to our customer, then we generally act as the agent and solely arrange for the third-party supplier to provide services to the customer. For performance obligations for whichexpenses, whether we act as theprincipal or agent, (primarily production and media buying), we record our revenue as the net amountto a lesser extent, periodic retainer fees, both of which are generally recognized shortly after billing.
The majority of our gross billings less pass-through expenses charged to a customer.
Variable Consideration
Revenuecontracts are for our services is measured based on the consideration specified in a contract with a customer. Contractual arrangements with clients may also include performance incentive provisions designed to link a portion of our revenue to our performance relative to either qualitative or quantitative metrics, or both.
Incentive compensation is estimated using the most likely amount and is included in revenue up to the amount that is not expected to result in a reversal of a significant amount of cumulative revenue recognized. We recognize revenue related to performance incentives as we satisfy the performance obligation to which performance incentives are related.
Practical Expedients
As part of our adoption of ASC 606, we apply the practical expedient and do not disclose information about remaining performance obligations that have original expected durationsperiods of one year or less. Amounts related toFor those performance obligationscontracts with expected durationsa term of greatermore than one year, are immaterial.
We apply the practical expedient and do not capitalize costs to obtain a contractwe had approximately $790.0 of unsatisfied performance obligations as these amounts would generallyof March 31, 2019 which will be recognized as services are performed over less than one year and are not material.
Additionally, we report revenue net of taxes assessed by governmental authorities that are directly imposed on our revenue-producing transactions.the remaining contractual terms.

Note 3:  RevenueLeases
AdoptionEffective January 1, 2019, IPG adopted Accounting Standards Codification Topic 842, Leases, ("ASC 842")using the modified retrospective transition method. As such, we have recognized a right-of-use asset and a corresponding lease liability on our Consolidated Balance Sheet for virtually all of ASC 606our leases with a term of more than twelve months. Prior-year financial statements were not recast under the new standard and, therefore, those amounts are not presented below. As an accounting policy, we have elected not to apply the recognition requirements to short-term leases, not to separate non-lease components from lease components, and have elected the package of transition provisions available for existing contracts, which allowed us to carryforward our historical assessments of (i) whether contracts are or contain leases, (ii) lease classification and (iii) initial direct costs.
EffectiveWe do not have a material amount of finance leases and the majority of our operating leases, for which we serve as the lessee, consist primarily of real-estate property for our offices around the world. Both the asset and liability are measured at the present value of the future minimum lease payments, with the adoptionasset being subject to adjustments such as initial direct costs, prepaid lease payments, and lease incentives. Many of ASC 606 on Januaryour leases provide for renewal and/or termination options, as well as escalation clauses, which are also factored into our lease payments when appropriate. Our leases have remaining lease terms of 1 2018year to 21 years. The discount rate used to measure the lease asset and liability is determined at the beginning of the lease term using the full retrospective transition method,rate implicit in the Company will revise its consolidated financial statementslease, if readily determinable, or using the Company's collatoralized credit adjusted borrowing rate.
The following table presents information on our operating leases for the yearsthree months ended DecemberMarch 31, 2016 and 2017, and applicable interim periods within the year ended December 31, 2017, as if ASC 606 had been effective for those periods. ASC 606, which accelerates the recognition of revenue primarily as a result of estimating variable consideration, mostly impacts the timing of revenue recognition between quarters, but also can affect, to a lesser extent, the amount of annual revenue recognized. Although ASC 606 results in an increase in the number of performance obligations within certain of our contractual arrangements, the amount or timing of revenue recognized is not materially impacted. ASC 606 also results in an increase in third-party costs being included in revenue and costs, primarily in connection with our events businesses, which has no impact on operating income, net income or cash flows. The increases to retained earnings as of December 31, 2017 and 2016 as a result of adopting ASC 606 were not material. The following tables summarize the effects of adopting ASC 606.2019.
 Three months ended
March 31, 2019
Operating lease cost$78.4
Short-term lease cost5.1
Sublease income(2.1)
Total lease cost$81.4
  
Cash paid for amounts included in the measurement of lease liabilities
$79.4
Right-of-use assets obtained in exchange for lease obligations
$1.1
Weighted-average remaining lease termSeven years
Weighted-average discount rate4.47%


10
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

CONSOLIDATED STATEMENT OF OPERATIONSOur future minimum payments of our operating leases as of March 31, 2019 are listed in the table below.
 Three months ended
June 30, 2017		 Six months ended
June 30, 2017
 
As Revised 1
 ASC 606 Adjustments As Adjusted 
As Revised 1
 ASC 606 Adjustments As Adjusted
REVENUE:           
Net revenue$1,815.4
 $19.2
 $1,834.6
 $3,485.7
 $24.2
 $3,509.9
Billable expenses69.5
 281.7
 351.2
 153.1
 586.6
 739.7
Total revenue1,884.9
 300.9
 2,185.8
 3,638.8
 610.8
 4,249.6
            
OPERATING EXPENSES:           
Salaries and related expenses1,228.9
 —
 1,228.9
 2,480.6
 —
 2,480.6
Office and other direct expenses318.4
 —
 318.4
 631.1
 —
 631.1
Billable expenses69.5
 281.7
 351.2
 153.1
 586.6
 739.7
Cost of services1,616.8
 281.7
 1,898.5
 3,264.8
 586.6
 3,851.4
Selling, general and administrative expenses20.3
 —
 20.3
 55.5
 —
 55.5
Depreciation and amortization41.3
 —
 41.3
 82.3
 —
 82.3
Total operating expenses1,678.4
 281.7
 1,960.1
 3,402.6
 586.6
 3,989.2
            
OPERATING INCOME206.5
 19.2
 225.7
 236.2
 24.2
 260.4
            
EXPENSES AND OTHER INCOME:           
Interest expense(25.7) —
 (25.7) (46.6) —
 (46.6)
Interest income4.7
 —
 4.7
 9.9
 —
 9.9
Other income, net(15.4) —
 (15.4) (14.6) —
 (14.6)
Total (expenses) and other income(36.4) —
 (36.4) (51.3) —
 (51.3)
            
Income before income taxes170.1
 19.2
 189.3
 184.9
 24.2
 209.1
Benefit of income taxes75.4
 6.2
 81.6
 73.3
 8.0
 81.3
Income of consolidated companies94.7
 13.0
 107.7
 111.6
 16.2
 127.8
Equity in net (loss) income of unconsolidated affiliates(0.1) —
 (0.1) 1.1
 —
 1.1
NET INCOME94.6
 13.0
 107.6
 112.7
 16.2
 128.9
Net loss attributable to noncontrolling interests0.1
 —
 0.1
 3.5
 —
 3.5
NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS$94.7
 $13.0
 $107.7
 $116.2
 $16.2
 $132.4
            
Earnings per share available to IPG common stockholders:           
Basic$0.24
 $0.03
 $0.27
 $0.30
 $0.04
 $0.34
Diluted$0.24
 $0.03
 $0.27
 $0.29
 $0.04
 $0.33
            
Weighted-average number of common shares outstanding:           
Basic392.3
 —
 392.3
 392.0
 —
 392.0
Diluted400.3
 —
 400.3
 399.6
 —
 399.6
            
Dividends declared per common share$0.18
   $0.18
 $0.36
   $0.36
PeriodNet Rent
2019$327.1
2020303.0
2021261.1
2022212.4
2023157.8
Thereafter557.2
Total future minimum lease payments1,818.6
Less: imputed interest(332.0)
Present value of future minimum lease payments1,486.6
Less: current portion of operating leases263.0
Non-current operating leases

$1,223.6

Our future minimum payments of our operating leases as of December 31, 2018 are listed in the table below.
1
These amounts have been revised for the new presentation as described in Note 1.

11
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)
Period
Rent
Obligations
 
Sublease Rental
Income
 Net Rent
2019$352.0
 $(7.7) $344.3
2020324.3
 (5.2) 319.1
2021282.3
 (2.2) 280.1
2022242.5
 (1.3) 241.2
2023184.0
 (0.6) 183.4
Thereafter714.6
 (0.5) 714.1
Total future minimum lease payments

$2,099.7
 $(17.5) $2,082.2

CONSOLIDATED BALANCE SHEET
 December 31, 2017
 As Reported ASC 606 Adjustments As Adjusted
ASSETS:     
Cash and cash equivalents$790.9
 $—
 $790.9
Accounts receivable, net of allowance of $42.74,585.0
 —
 4,585.0
Expenditures billable to clients1,747.4
 (1,747.4) —
Accounts receivable, billable to clients—
 1,747.4
 1,747.4
Assets held for sale5.7
 —
 5.7
Other current assets335.1
 11.4
 346.5
Total current assets7,464.1
 11.4
 7,475.5
Property and equipment, net of accumulated depreciation of $1,036.2650.4
 —
 650.4
Deferred income taxes236.0
 (2.0) 234.0
Goodwill3,820.4
 —
 3,820.4
Other non-current assets524.3
 0.1
 524.4
TOTAL ASSETS$12,695.2
 $9.5
 $12,704.7
      
LIABILITIES:     
Accounts payable$6,907.8
 $(487.6) $6,420.2
Accrued liabilities674.7
 —
 674.7
Contract liabilities—
 484.7
 484.7
Short-term borrowings84.9
 —
 84.9
Current portion of long-term debt2.0
 —
 2.0
Liabilities held for sale8.8
 —
 8.8
Total current liabilities7,678.2
 (2.9) 7,675.3
Long-term debt1,285.6
 —
 1,285.6
Deferred compensation476.6
 —
 476.6
Other non-current liabilities766.9
 1.9
 768.8
TOTAL LIABILITIES10,207.3
 (1.0) 10,206.3
      
Redeemable noncontrolling interests252.1
 —
 252.1
      
STOCKHOLDERS’ EQUITY:     
Common stock38.6
 —
 38.6
Additional paid-in capital955.2
 —
 955.2
Retained earnings2,093.6
 10.9
 2,104.5
Accumulated other comprehensive loss, net of tax(827.4) (0.4) (827.8)
 2,260.0
 10.5
 2,270.5
Less: Treasury stock(59.0) —
 (59.0)
Total IPG stockholders’ equity2,201.0
 10.5
 2,211.5
Noncontrolling interests34.8
 —
 34.8
TOTAL STOCKHOLDERS’ EQUITY2,235.8
 10.5
 2,246.3
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$12,695.2
 $9.5
 $12,704.7
As of March 31, 2019, we have additional operating leases that have not yet commenced with future minimum lease payments of approximately $180.0 that will commence in 2019 with lease terms of 5 to 15 years.


12
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

CONSOLIDATED STATEMENT OF CASH FLOWS
 Six months ended June 30, 2017
  
As Reported ASC 606 Adjustments As Adjusted
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net income$112.7
 $16.2
 $128.9
Adjustments to reconcile net income to net cash used in operating activities:     
Depreciation and amortization82.3
 —
 82.3
Provision for uncollectible receivables8.6
 —
 8.6
Amortization of restricted stock and other non-cash compensation46.0
 —
 46.0
Net amortization of bond discounts and deferred financing costs2.8
 —
 2.8
Deferred income tax provision1.5
 8.0
 9.5
Net losses on sales of businesses12.2
 —
 12.2
Other10.2
 —
 10.2
Changes in assets and liabilities, net of acquisitions and divestitures, providing (using) cash:     
Accounts receivable769.7
 —
 769.7
Expenditures billable to clients(165.3) 165.3
 —
Accounts receivable, billable to clients—
 (165.5) (165.5)
Other current assets(82.0) (2.5) (84.5)
Accounts payable(622.9) (28.4) (651.3)
Accrued liabilities(313.9) —
 (313.9)
Contract liabilities—
 6.9
 6.9
Other non-current assets and liabilities(15.0) —
 (15.0)
Net cash used in operating activities(153.1) —
 (153.1)
CASH FLOWS FROM INVESTING ACTIVITIES:     
Net cash used in investing activities(96.0) —
 (96.0)
CASH FLOWS FROM FINANCING ACTIVITIES:     
Net cash used in financing activities(199.4) —
 (199.4)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash8.2
 —
 8.2
Net decrease in cash, cash equivalents and restricted cash(440.3) —
 (440.3)
Cash, cash equivalents and restricted cash at beginning of period1,100.2
 —
 1,100.2
Cash, cash equivalents and restricted cash at end of period$659.9
 $—
 $659.9
Retained earnings as of December 31, 2016 and June 30, 2017 increased by $35.6 and $51.8, respectively, as a result of the adoption of ASC 606. Accumulated other comprehensive loss, net of tax, as of December 31, 2016 and June 30, 2017 decreased by $1.9 and $0.8, respectively, as a result of the adoption of the ASC 606.
Disaggregation of Revenue
The following is a description of the principal activities, by reportable segment, from which we generate revenue. For more detailed information about reportable segments, see Note 12.
Integrated Agency Networks
The IAN segment of IPG principally generates revenue from providing advertising and media services as well as a comprehensive array of global communications and marketing services. Within IAN’s advertising business, we typically identify two performance obligations for creative and production services. Depending on the arrangement, we typically act as the principal for our creative services and as the agent for our production services. Within our media business, we also identify two performance obligations for media planning and media buying services. We typically act as the principal for our media planning services and

13
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

as the agent for media buying services. Generally, our branding arrangements consist of two performance obligations, and we act as the principal for both performance obligations.
Constituency Management Group
The CMG segment generates revenue from providing events and public relations services as well as sports and entertainment marketing, corporate and brand identity, and strategic marketing consulting. In CMG’s events and public relations arrangements, we typically identify one performance obligation, for which we act as the principal in most arrangements. Generally, our branding arrangements consist of two performance obligations, and we act as the principal for both performance obligations.
Principal Geographic Markets
Our agencies are located in over 100 countries, including every significant world market. Our geographic revenue breakdown is listed below.
 Three months ended
June 30,		 Six months ended
June 30,
Total revenue:2018 2017 2018 2017
United States$1,445.7
 $1,350.8
 $2,796.4
 $2,666.0
International:       
United Kingdom201.6
 166.0
 406.0
 341.0
Continental Europe205.1
 176.3
 386.8
 334.5
Asia Pacific304.2
 260.5
 535.7
 480.8
Latin America92.5
 94.5
 172.5
 170.3
Other142.7
 137.7
 263.5
 257.0
Total International946.1
 835.0
 1,764.5
 1,583.6
Total Consolidated$2,391.8
 $2,185.8
 $4,560.9
 $4,249.6
 Three months ended
June 30,		 Six months ended
June 30,
Net revenue:2018 2017 2018 2017
United States$1,171.5
 $1,127.6
 $2,263.8
 $2,184.7
International:       
United Kingdom175.7
 141.7
 339.2
 276.9
Continental Europe178.7
 154.6
 337.4
 295.5
Asia Pacific214.2
 205.3
 393.0
 379.0
Latin America82.0
 85.7
 155.9
 154.7
Other126.1
 119.7
 232.9
 219.1
Total International776.7
 707.0
 1,458.4
 1,325.2
Total Consolidated$1,948.2
 $1,834.6
 $3,722.2
 $3,509.9


14
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

IANThree months ended
June 30,		 Six months ended
June 30,
Total revenue:2018 2017 2018 2017
United States$1,063.2
 $1,022.3
 $2,086.4
 $1,992.2
International749.3
 689.0
 1,411.6
 1,286.9
Total IAN$1,812.5
 $1,711.3
 $3,498.0
 $3,279.1
        
Net revenue:       
United States$963.3
 $926.3
 $1,861.3
 $1,788.3
International665.8
 607.7
 1,249.1
 1,136.8
Total IAN$1,629.1
 $1,534.0
 $3,110.4
 $2,925.1

CMGThree months ended
June 30,		 Six months ended
June 30,
Total revenue:2018 2017 2018 2017
United States$382.5
 $328.5
 $710.0
 $673.8
International196.8
 146.0
 352.9
 296.7
Total CMG$579.3
 $474.5
 $1,062.9
 $970.5
        
Net revenue:       
United States$208.2
 $201.3
 $402.5
 $396.4
International110.9
 99.3
 209.3
 188.4
Total CMG$319.1
 $300.6
 $611.8
 $584.8
Contract Balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.
 June 30,
2018		 December 31,
2017
Accounts receivable, net of allowance of $44.5 and $42.7, respectively$4,247.7
 $4,585.0
Accounts receivable, billable to clients1,945.8
 1,747.4
Contract assets44.9
 11.5
Contract liabilities (deferred revenue)510.8
 484.7
Contract assets are primarily comprised of contract incentives that are generally satisfied annually under the terms of our contracts and are transferred to accounts receivable when the rights to payment becomes unconditional. Contract liabilities relate to advance consideration received from customers under the terms of our contracts primarily related to reimbursements of third party expenses, whether we act as principal or agent, and to a lesser extent, periodic retainer fees, both of which are generally recognized shortly after billing.


1511
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Note 4:  Debt and Credit Arrangements
Long-Term Debt
A summary of the carrying amounts and fair values of our long-term debt is listed below.
Effective
Interest Rate
 June 30,
2018		 December 31,
2017
Effective
Interest Rate
 March 31,
2019		 December 31,
2018
Book
Value
 
Fair
Value 1
 
Book
Value
 
Fair
Value 1
Book
Value
 
Fair
Value 1
 
Book
Value
 
Fair
Value 1
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $1.2 and $0.9, respectively)4.13% $247.9
 $251.6
 $247.6
 $259.0
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $0.7 and $1.9, respectively)4.32% 497.4
 495.6
 497.1
 513.2
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.6 and $2.4, respectively)4.24% 497.0
 503.3
 496.7
 524.2
3.50% Senior Notes due 2020 (less unamortized discount and issuance costs of $0.7 and $2.2, respectively)3.89% $497.1
 $504.3
 $496.6
 $499.9
3.75% Senior Notes due 2021 (less unamortized discount and issuance costs of $0.3 and $2.7, respectively)3.98% 497.0
 508.4
 496.8
 503.2
4.00% Senior Notes due 2022 (less unamortized discount and issuance costs of $1.0 and $0.7, respectively)4.13% 248.3
 255.2
 248.2
 250.3
3.75% Senior Notes due 2023 (less unamortized discount and issuance costs of $0.6 and $1.6, respectively)4.32% 497.8
 507.5
 497.7
 491.4
4.20% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.5 and $2.1, respectively)4.24% 497.4
 515.0
 497.3
 492.6
4.65% Senior Notes due 2028 (less unamortized discount and issuance costs of $1.6 and $4.2, respectively)4.78% 494.2
 521.2
 494.0
 494.1
5.40% Senior Notes due 2048 (less unamortized discount and issuance costs of $2.8 and $5.5, respectively)5.48% 491.7
 505.4
 491.7
 474.1
Term Loan due 2021 - LIBOR plus 1.25% 400.0
 400.0
 400.0
 400.0
Other notes payable and capitalized leases 40.5
 40.5
 46.2
 46.2
 40.3
 40.3
 38.0
 38.0
Total long-term debt 1,282.8
   1,287.6
   3,663.8
   3,660.3
  
Less: current portion 0.1
   2.0
   0.1
   0.1
  
Long-term debt, excluding current portion $1,282.7
   $1,285.6
   $3,663.7
   $3,660.2
  
 
1See Note 1314 for information on the fair value measurement of our long-term debt.
Credit Agreements
We maintain a committed corporate credit facility, originally dated as of July 18, 2008, which has been amended and restated from time to time (the "Credit Agreement"). We use our Credit Agreement to increase our financial flexibility, to provide letters of credit primarily to support obligations of our subsidiaries and to support our commercial paper program. The Credit Agreement is a revolving facility, expiring in October 2022, under which amounts borrowed by us or any of our subsidiaries designated under the Credit Agreement may be repaid and reborrowed, subject to an aggregate lending limit of $1,500.0, or the equivalent in other currencies. The Company has the ability to increase the commitments under the Credit Agreement from time to time by an additional amount of up to $250.0, provided the Company receives commitments for such increases and satisfies certain other conditions. The aggregate available amount of letters of credit outstanding may decrease or increase, subject to a sublimit on letters of credit of $50.0, or the equivalent in other currencies. Our obligations under the Credit Agreement are unsecured. As of June 30, 2018,March 31, 2019, there were no borrowings under the Credit Agreement; however, we had $8.5$8.7 of letters of credit under the Credit Agreement, which reduced our total availability to $1,491.5.$1,491.3. We were in compliance with all of our covenants in the Credit Agreement as of June 30, 2018.March 31, 2019.
We also have uncommitted lines of credit with various banks whichthat permit borrowings at variable interest rates and whichthat are primarily used to fund working capital needs. We have guaranteed the repayment of some of these borrowings made by certain subsidiaries. If we lose access to these credit lines, we would have to provide funding directly to some of our operations. As of June 30, 2018,March 31, 2019, the Company had uncommitted lines of credit in an aggregate amount of $1,127.0,$1,112.7, under which we had outstanding borrowings of $81.6$69.9 classified as short-term borrowings on our Consolidated Balance Sheet. The average amount outstanding during the secondfirst quarter of 20182019 was $94.0,$102.9, with a weighted-average interest rate of approximately 4.8%4.3%.

12
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Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Commercial Paper
We have a commercial paper program under which theThe Company is authorized to issue unsecured commercial paper up to a maximum aggregate amount outstanding at any time of $1,500.0. Borrowings under the program are supported by the Credit Agreement described above. Proceeds of the commercial paper are used for working capital and general corporate purposes, including the repayment of maturing indebtedness and other short-term liquidity needs. The maturities of the commercial paper vary but may not exceed 397 days from the date of issue. As of June 30, 2018,March 31, 2019, there was $676.0$202.5 of commercial paper outstanding. The average amount outstanding under the program during the secondfirst quarter of 20182019 was $988.0,$154.7, with a weighted-average interest rate of 2.5%2.8% and a weighted-average maturity of thirtythirteen days.


16
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Note 5:  Acquisitions
Acxiom Acquisition
On October 1, 2018 (the "acquisition date"), the Company completed its acquisition of Acxiom (the "Acxiom Acquisition"). The purchase accounting process has not been completed primarily because the valuation of acquired assets has not been finalized. We continueexpect to evaluate strategic opportunities to expand our industry expertise, strengthen our position in high-growth and key strategic geographical markets and industry sectors, advance our technological capabilities and improve our operational efficiency through both acquisitions and increased ownership interests in current investments. Our acquisitions typically provide for an initial payment atcomplete the time of closing and additional contingent purchase price payments based on the future performance of the acquired entity. We have entered into agreements that may require us to purchase additional equity interests in certain consolidated and unconsolidated subsidiaries. The amounts at which we record these transactions in our financial statements are based on estimates of the future financial performance of the acquired entity, the timing of the exercise of these rights, foreign currency exchange rates and other factors.
During the first half of 2018, we completed two acquisitions, including a full-service digital agency based in Brazil and an entertainment marketing and brand licensing agency in the fashion and lifestyle sector based in the U.K. Both of our acquisitions were included in the CMG operating segment. During the first half of 2018, we recorded $14.2 of goodwill and intangible assets related to our acquisitions.
During the first half of 2017, we completed three acquisitions, including a content creation and marketing agency based in the Netherlands, an independent media agency and digital consultancy based in Finland, and an integrated marketing communications agency based in Canada. All three of our acquisitions were included in the IAN operating segment. During the first half of 2017, we recorded $22.9 of goodwill and intangible assets related to our acquisitions.
The results of operations of our acquired companies were included in our consolidated resultsaccounting as soon as practicable but no later than one year from the closing date of each acquisition. Details of cash paid for current and prior years' acquisitions are listed below.acquisition date. We do not believe there will be material adjustments.
 Six months ended
June 30,
 2018 2017
Cost of investment: current-year acquisitions$8.7
 $14.8
Cost of investment: prior-year acquisitions16.2
 37.1
Less: net cash acquired(0.4) (3.0)
Total cost of investment24.5
 48.9
Operating payments 1
18.2
 34.7
Total cash paid for acquisitions 2
$42.7
 $83.6
Redeemable Noncontrolling Interests
1Represents cash payments for amounts that have been recognized in operating expenses since the date of acquisition either relating to adjustments to estimates in excess of the initial value of contingent payments recorded or were contingent upon the future employment of the former owners of the acquired companies. Amounts are reflected in the operating section of the unaudited Consolidated Statements of Cash Flows.
2Of the total cash paid for acquisitions, $8.5 and $12.6 for the six months ended June 30, 2018 and 2017, respectively, are classified under the investing section of the unaudited Consolidated Statements of Cash Flows, as acquisitions, net of cash acquired. These amounts relate to initial payments for new transactions. Of the total cash paid for acquisitions, $16.0 and $36.3 for the six months ended June 30, 2018 and 2017, respectively, are classified under the financing section of the unaudited Consolidated Statements of Cash Flows as acquisition-related payments. These amounts relate to deferred payments and increases in our ownership interest for prior acquisitions.
Many of our acquisitions include provisions under which the noncontrolling equity owners may require us to purchase additional interests in a subsidiary at their discretion. Redeemable noncontrolling interests are adjusted quarterly to their estimated redemption value, but not less than their initial fair value. Any adjustments to the redemption value impact retained earnings or additional paid in capital, except for foreign currency translation adjustments.
The following table presents changes in our redeemable noncontrolling interests.
 Three months ended
March 31,
 2019 2018
Balance at beginning of period$167.9
 $252.1
Change in related noncontrolling interests balance(2.8) (2.8)
Changes in redemption value of redeemable noncontrolling interests:   
Redemptions(3.1) (1.9)
Redemption value adjustments(0.2) (0.5)
Balance at end of period$161.8
 $246.9


1713
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

The following table presents changes in our redeemable noncontrolling interests.
 Six months ended
June 30,
 2018 2017
Balance at beginning of period$252.1
 $252.8
Change in related noncontrolling interests balance(14.6) (6.5)
Changes in redemption value of redeemable noncontrolling interests:   
Additions0.0
 3.0
Redemptions(32.2) (13.2)
Redemption value adjustments(39.5) 7.3
Balance at end of period$165.8
 $243.4

Note 6: EarningsLoss Per Share
The following sets forth basic and diluted earningsloss per common share available to IPG common stockholders.
Three months ended
June 30,		 Six months ended
June 30,		Three months ended
March 31,
2018 2017 2018 20172019 2018
Net income available to IPG common stockholders$145.8
 $107.7
 $131.7
 $132.4
Net loss available to IPG common stockholders$(8.0) $(14.1)
          
Weighted-average number of common shares outstanding - basic383.6
 392.3
 383.5
 392.0
384.5
 383.4
Dilutive effect of stock options and restricted shares5.9
 8.0
 5.4
 7.6
N/A
 N/A
Weighted-average number of common shares outstanding - diluted389.5
 400.3
 388.9
 399.6
384.5
 383.4
          
Earnings per share available to IPG common stockholders:       
Loss per share available to IPG common stockholders:   
Basic$0.38
 $0.27
 $0.34
 $0.34
$(0.02) $(0.04)
Diluted$0.37
 $0.27
 $0.34
 $0.33
$(0.02) $(0.04)
Shares outstanding and loss per share are equal on a basic and diluted basis for the three months ended March 31, 2019 and 2018 because our potentially dilutive securities are antidilutive as a result of the net loss available to IPG common stockholders. Potential shares of restricted stock and stock options totaling 4.4 and 5.2 were excluded from the diluted loss per share calculation for the three months ended March 31, 2019 and 2018, respectively.

Note 7:  Supplementary Data
Accrued Liabilities
The following table presents the components of accrued liabilities.
June 30,
2018		 December 31,
2017		March 31,
2019		 December 31,
2018
Salaries, benefits and related expenses$310.7
 $441.7
$346.2
 $494.9
Acquisition obligations65.7
 42.0
77.2
 65.7
Interest62.1
 43.6
Office and related expenses48.8
 53.2
28.9
 52.2
Interest16.9
 16.4
Restructuring charges11.1
 0.0
Other109.4
 121.4
138.1
 150.5
Total accrued liabilities$551.5
 $674.7
$663.6
 $806.9

Other Expense, Net
Results of operations for the three months ended March 31, 2019 and 2018 include certain items that are not directly associated with our revenue-producing operations.
 Three months ended
March 31,
 2019 2018
Net losses on sales of businesses$(8.6) $(24.4)
Other1.7
 0.0
Total other expense, net$(6.9) $(24.4)
Net losses on sales of businesses – During the three months ended March 31, 2019, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of accounts receivable, as held for sale within our IAN reportable segment. During the three months ended March 31, 2018, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of cash, as held for sale within our IAN reportable segment. The businesses held for sale primarily represent unprofitable, non-strategic agencies which are expected to be sold within the next twelve months.

1814
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Other Expense, Net
Results of operations for the three and six months ended June 30, 2018 and 2017 include certain items that are not directly associated with our revenue-producing operations.
 Three months ended
June 30,		 Six months ended
June 30,
 2018 2017 2018 2017
Net losses on sales of businesses$(19.8) $(13.1) $(44.2) $(12.2)
Other3.5
 (2.3) 3.5
 (2.4)
Total other expense, net$(16.3) $(15.4) $(40.7) $(14.6)
Net losses on sales of businesses – During the three and six months ended June 30, 2018 and 2017, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of cash, accounts receivable and accounts payable, as held for sale within our IAN operating segment.

Share Repurchase Program
In FebruaryOn July 2, 2018, our Boardin connection with the announcement of Directors (the "Board") authorizedthe Acxiom Acquisition, we announced that share repurchases will be suspended for a new share repurchase programperiod of time in order to repurchase from time to time up to $300.0, excluding fees, of our common stock, which wasreduce the increased debt levels incurred in addition toconjunction with the remaining amount available to be repurchased from the $300.0 authorization made by the Board in February 2017.
We may effect such repurchases through open market purchases, trading plans established in accordance with SEC rules, derivative transactions or other means. The timing and amount of repurchases in future periods will depend on market conditions and other funding requirements.
The following table presents our share repurchase activity under our share repurchase programs for the six months ended June 30, 2018 and 2017.
 Six months ended
June 30,
 2018 2017
Number of shares repurchased5.0
 4.8
Aggregate cost, including fees$114.5
 $115.0
Average price per share, including fees$23.02
 $24.13
acquisition. As of June 30, 2018, $341.0,March 31, 2019, $338.4, excluding fees, remains available for repurchase under the share repurchase programs. The share repurchase programs authorized in previous years, which have no expiration date.

Note 8:  Income Taxes
For the three and six months ended June 30, 2018,March 31, 2019, our effective income tax rates were negatively impactedrate was driven by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and bynet losses on sales of businesses, and the classification of certain assets as held for sale, for which we receiveddid not receive a minimal tax benefit, partially offset by additional research and development credits basedexcess tax benefits on employee share-based payments, the conclusionmajority of multi-year studies.
The Tax Cuts and Jobs Act of 2017 imposed a new tax on certain foreign earnings generatedwhich is typically in 2018 and forward. These global intangible low-taxed income ("GILTI") tax rules are complex. U.S. GAAP allows usthe first quarter due to choose an accounting policy which treats the U.S. tax under GILTI provisions as either a current expense, as incurred, or as a componenttiming of the Company’s measurementvesting of deferred taxes. The Company has elected to account for the GILTI tax as a current expense.awards.
We have various tax years under examination by tax authorities in various countries, and in various states, such as New York, in which we have significant business operations. It is not yet known whether these examinations will, in the aggregate, result in our paying additional taxes. We believe our tax reserves are adequate in relation to the potential for additional assessments in each of the jurisdictions in which we are subject to taxation. We regularly assess the likelihood of additional tax assessments in those jurisdictions and, if necessary, adjust our reserves as additional information or events require.
With respect to all tax years open to examination by U.S. federal, various state and local, and non-U.S. tax authorities, we currently anticipate that total unrecognized tax benefits will decrease by an amount between $30.0$20.0 and $40.0$30.0 in the next twelve

19
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

months, a portion of which will affect our effective income tax rate, primarily as a result of the settlement of tax examinations and the lapsing of statutes of limitations.
We are effectively settled with respect to U.S. federal income tax audits through 2012, with the exception of 2009. With limited exceptions, we are no longer subject to state and local income tax audits for years prior to 2007 or non-U.S. income tax audits for years prior to 2006.2009.

Note 9:  Restructuring Charges
In the first quarter of 2019, the Company implemented a cost initiative (the "2019 Plan") to better align our cost structure with our revenue primarily related to specific client losses occurring in 2018, the components of which are listed below.
 Three months ended
March 31, 2019
Severance and termination costs$19.9
Lease impairment costs11.9
Total restructuring charges$31.8
Net restructuring charges was comprised of $25.6 at IAN and $5.6 at CMG. All restructuring actions were identified and initiated by the end of the first quarter of 2019, with all actions expected to be substantially completed by the end of the second quarter of 2019.
Severance and termination costs relate to a planned reduction in workforce of 575 employees. The employee groups affected include: executive, regional and account management as well as administrative, creative and media production personnel. Cash payments of $8.8 were made during the quarter, with the remaining liability of $11.1 expected to be paid by the end of the second quarter of 2019.
Lease impairment costs relate to the office spaces that were vacated as part of the 2019 Plan, which includes impairment on the right-of-use asset of operating leases, furniture, and leasehold improvements. Given the remaining lease terms involved, the lease obligation will be paid out over a period of several years, net of sublease income.

Note 9:10:  Incentive Compensation Plans
We issue stock-based compensation and cash awards to our employees under a plan established by the Compensation and Leadership Talent Committee of the Board of Directors (the “Compensation Committee”"Compensation Committee") and approved by our shareholders. We issued the following stock-based awards under the 2014 Performance Incentive Plan (the "2014 PIP") during the sixthree months ended June 30, 2018.March 31, 2019.

15
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Awards 
Weighted-average
grant-date fair value
(per award)
Awards 
Weighted-average
grant-date fair value
(per award)
Restricted stock (shares or units)1.8
 $23.62
1.9
 $22.88
Performance-based stock (shares)2.9
 $21.13
2.0
 $20.17
Restricted stock units (settled in cash)0.1
 $23.63
Total stock-based compensation awards4.8
 

3.9
 

During the sixthree months ended June 30, 2018,March 31, 2019, the Compensation Committee granted performance cash awards under the 2014 PIP and restricted cash awards under the 2009 Restricted Cash Plan with a total annual target value of $55.7$40.0 and $19.8,$16.3, respectively. Cash awards are expensed over the vesting period, which is typically three years.

Note 10:11:  Accumulated Other Comprehensive Loss, Net of Tax
The following tables present the changes in accumulated other comprehensive loss, net of tax, by component.
 
Foreign Currency
Translation Adjustments
 
Derivative
Instruments
 Defined Benefit Pension and Other Postretirement Plans Total
Balance as of December 31, 2017$(585.3) $(6.8) $(235.7) $(827.8)
Other comprehensive loss before reclassifications(92.2) 0.0
 (0.9) (93.1)
Amount reclassified from accumulated other comprehensive loss, net of tax13.4
 0.8
 3.3
 17.5
Balance as of June 30, 2018$(664.1) $(6.0) $(233.3) $(903.4)
 
Foreign Currency
Translation Adjustments
 
Derivative
Instruments
 Defined Benefit Pension and Other Postretirement Plans Total
Balance as of December 31, 2018$(716.4) $(5.3) $(219.4) $(941.1)
Other comprehensive income before reclassifications8.4
 0.0
 0.0
 8.4
Amount reclassified from accumulated other comprehensive loss, net of tax1.2
 0.5
 1.3
 3.0
Balance as of March 31, 2019$(706.8) $(4.8) $(218.1) $(929.7)
Foreign Currency
Translation Adjustments
 
Available-for-Sale
Securities
 
Derivative
Instruments
 Defined Benefit Pension and Other Postretirement Plans Total
Foreign Currency
Translation Adjustments
 
Derivative
Instruments
 Defined Benefit Pension and Other Postretirement Plans Total
Balance as of December 31, 2016$(718.6) $0.6
 $(8.4) $(238.0) $(964.4)
Balance as of December 31, 2017$(585.3) $(6.8) $(235.7) $(827.8)
Other comprehensive income before reclassifications85.2
 0.1
 0.0
 0.4
 85.7
22.1
 0.0
 0.4
 22.5
Amount reclassified from accumulated other comprehensive loss, net of tax0.3
 0.0
 0.7
 2.7
 3.7
12.5
 0.3
 1.7
 14.5
Balance as of June 30, 2017$(633.1) $0.7
 $(7.7) $(234.9) $(875.0)
Balance as of March 31, 2018$(550.7) $(6.5) $(233.6) $(790.8)

20
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Amounts reclassified from accumulated other comprehensive loss, net of tax, for the three and six months ended June 30,March 31, 2019 and 2018 and 2017 are as follows:
Three months ended
June 30,		 Six months ended
June 30,		 Affected Line Item in the Consolidated Statements of OperationsThree months ended
March 31,		 Affected Line Item in the Consolidated Statements of Operations
2018 2017 2018 2017 2019 2018 
Foreign currency translation adjustments$0.9
 $0.7
 $13.4
 $0.3
 Other expense, net$1.2
 $12.5
 Other expense, net
Losses on derivative instruments0.6
 0.6
 1.1
 1.1
 Interest expense0.6
 0.5
 Interest expense
Amortization of defined benefit pension and postretirement plan items2.0
 1.8
 4.1
 3.5
 Other expense, net1.7
 2.1
 Other expense, net
Tax effect(0.5) (0.6) (1.1) (1.2) Provision for income taxes(0.5) (0.6) Provision for income taxes
Total amount reclassified from accumulated other comprehensive loss, net of tax$3.0
 $2.5
 $17.5
 $3.7
 $3.0
 $14.5
 
 
Note 11:12:  Employee Benefits
We have a defined benefit pension plan that covers certain U.S. employees (the “Domestic Pension Plan”). We also have numerous funded and unfunded plans outside the U.S. The Interpublic Limited Pension Plan in the U.K. is a defined benefit plan and is our most material foreign pension plan in terms of the benefit obligation and plan assets. Some of our domestic and foreign subsidiaries provide postretirement health benefits and life insurance to eligible employees and, in certain cases, their dependents.

16
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

The domestic postretirement benefit plan is our most material postretirement benefit plan in terms of the benefit obligation. Certain immaterial foreign pension and postretirement benefit plans have been excluded from the table below.
The components of net periodic cost for the Domestic Pension Plan, the significant foreign pension plans and the domestic postretirement benefit plan are listed below.
 Domestic Pension Plan Foreign Pension Plans Domestic Postretirement Benefit Plan
Three months ended June 30,2018 2017 2018 2017 2018 2017
Service cost$0.0
 $0.0
 $0.9
 $1.0
 $0.0
 $0.0
Interest cost1.1
 1.2
 3.4
 3.3
 0.2
 0.3
Expected return on plan assets(1.5) (1.5) (4.8) (4.4) 0.0
 0.0
Amortization of:           
Prior service cost (credit)0.0
 0.0
 0.1
 0.0
 (0.1) 0.0
Unrecognized actuarial losses0.4
 0.4
 1.5
 1.4
 0.1
 0.0
Net periodic cost$0.0
 $0.1
 $1.1
 $1.3
 $0.2
 $0.3
Domestic Pension Plan Foreign Pension Plans Domestic Postretirement Benefit PlanDomestic Pension Plan Foreign Pension Plans Domestic Postretirement Benefit Plan
Six months ended June 30,2018 2017 2018 2017 2018 2017
Three months ended March 31,2019 2018 2019 2018 2019 2018
Service cost$0.0
 $0.0
 $2.0
 $1.9
 $0.0
 $0.0
$0.0
 $0.0
 $1.2
 $1.1
 $0.0
 $0.0
Interest cost2.2
 2.5
 6.8
 6.6
 0.5
 0.6
1.2
 1.1
 3.2
 3.4
 0.3
 0.3
Expected return on plan assets(3.3) (3.1) (9.7) (8.7) 0.0
 0.0
(1.5) (1.8) (4.4) (4.9) 0.0
 0.0
Settlements and curtailments0.0
 0.0
 0.2
 0.0
 0.0
 0.0
0.0
 0.0
 0.0
 0.2
 0.0
 0.0
Amortization of:                      
Prior service cost (credit)

0.0
 0.0
 0.1
 0.0
 (0.1) 0.0
Unrecognized actuarial losses0.8
 0.8
 3.0
 2.7
 0.1
 0.0
0.5
 0.4
 1.2
 1.5
 0.0
 0.0
Net periodic cost$(0.3) $0.2
 $2.4
 $2.5
 $0.5
 $0.6
$0.2
 $(0.3) $1.2
 $1.3
 $0.3
 $0.3
The components of net periodic cost other than the service cost component are included in the line item “Other expense, net” in the Consolidated Statements of Operations.

21
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

During the sixthree months ended June 30, 2018,March 31, 2019, we contributed $1.9$0.5 and $9.9$4.1 of cash to our domestic and foreign pension plans, respectively. For the remainder of 2018,2019, we expect to contribute approximately $8.0$2.0 and $9.0$13.0 of cash to our domestic and foreign pension plans, respectively.


2217
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Note 12:13:  Segment Information
As of June 30, 2018,March 31, 2019, we have two reportable segments: IAN and CMG. IAN is comprised of McCann Worldgroup, Foote, Cone & Belding ("FCB"), MullenLowe Group, IPG Mediabrands, Acxiom, our digital specialist agencies and our domestic integrated agencies. CMG is comprised of a number of our specialist marketing services offerings. We also report results for the “Corporate and other” group. TheBeginning in the first quarter of 2019, Acxiom's results are presented in IAN although we continue to evaluate our financial reporting structure, and the profitability measure employed by our chief operating decision maker for allocating resources to operating divisions and assessing operating division performance is segment operating income (loss). Segment information is presented consistently with the basis described in our 2017 Annual Report on Form 10-K.EBITA. Summarized financial information concerning our reportable segments is shown in the following table.
Three months ended
June 30,		 Six months ended
June 30,		Three months ended
March 31,
2018 2017 2018 20172019 2018
Total revenue:          
IAN$1,812.5
 $1,711.3
 $3,498.0
 $3,279.1
$1,872.2
 $1,685.5
CMG579.3
 474.5
 1,062.9
 970.5
489.0
 483.6
Total$2,391.8
 $2,185.8
 $4,560.9
 $4,249.6
$2,361.2
 $2,169.1
          
Net revenue:          
IAN$1,629.1
 $1,534.0
 $3,110.4
 $2,925.1
$1,711.2
 $1,481.3
CMG319.1
 300.6
 611.8
 584.8
293.6
 292.7
Total$1,948.2
 $1,834.6
 $3,722.2
 $3,509.9
$2,004.8
 $1,774.0
          
Segment operating income (loss):       
Segment EBITA:   
IAN$238.2
 $195.9
 $295.2
 $246.0
$114.5
 $61.0
CMG42.0
 51.5
 61.4
 73.6
1.9
 20.7
Corporate and other(31.0) (21.7) (68.6) (59.2)(44.6) (37.6)
Total249.2
 225.7
 288.0
 260.4
$71.8
 $44.1
          
Interest expense, net(21.4) (21.0) (37.3) (36.7)
Other expense, net(16.3) (15.4) (40.7) (14.6)
Income before income taxes$211.5
 $189.3
 $210.0
 $209.1
Amortization of acquired intangibles:   
IAN$20.5
 $4.1
CMG1.1
 1.2
Corporate and other0.0
 0.0
Total$21.6
 $5.3
          
Depreciation and amortization       
Depreciation:   
IAN$35.8
 $33.9
 $73.2
 $66.6
$42.3
 $33.3
CMG6.0
 6.0
 12.1
 12.0
4.6
 4.9
Corporate and other2.2
 1.4
 4.7
 3.7
2.6
 2.5
Total$44.0
 $41.3
 $90.0
 $82.3
$49.5
 $40.7
          
Capital expenditures:          
IAN$31.9
 $31.4
 $47.7
 $48.6
$26.5
 $15.8
CMG1.9
 4.0
 3.0
 6.7
1.0
 1.1
Corporate and other4.9
 8.7
 10.8
 13.6
5.3
 5.9
Total$38.7
 $44.1
 $61.5
 $68.9
$32.8
 $22.8
       
June 30,
2018		 December 31,
2017		    
Total assets:       
IAN$10,840.0
 $10,978.0
    
CMG1,476.8
 1,427.4
    
Corporate and other40.8
 299.3
    
Total$12,357.6
 $12,704.7
    
 


23

18
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

 March 31,
2019		 December 31,
2018
Total assets 1:
   
IAN$13,888.1
 $13,867.9
CMG1,660.5
 1,516.7
Corporate and other501.4
 235.7
Total$16,050.0
 $15,620.3
1 Results for December 31, 2018 have been restated to conform to the current-period presentation.
The following table presents the reconciliation of segment EBITA to Income (loss) before income taxes.
 Three months ended
March 31,
 2019 2018
    
IAN EBITA$114.5
 $61.0
CMG EBITA1.9
 20.7
Corporate and other EBITA(44.6) (37.6)
Consolidated amortization of acquired intangibles(21.6) (5.3)
Operating income50.2
 38.8
Total (expenses) and other income(48.9) (40.3)
Income (loss) before income taxes$1.3
 $(1.5)


19
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Note 13:14:  Fair Value Measurements
Authoritative guidance for fair value measurements establishes a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
  
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
   
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Financial Instruments that are Measured at Fair Value on a Recurring Basis
We primarily apply the market approach to determine the fair value of financial instruments that are measured at fair value on a recurring basis. There were no changes to our valuation techniques used to determine the fair value of financial instruments during the sixthree months ended June 30, 2018March 31, 2019. The following tables present information about our financial instruments measured at fair value on a recurring basis as of June 30, 2018March 31, 2019 and December 31, 20172018, and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value.
June 30, 2018 Balance Sheet ClassificationMarch 31, 2019 Balance Sheet Classification
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 
Assets                
Cash equivalents$111.8
 $0.0
 $0.0
 $111.8
 Cash and cash equivalents$163.0
 $0.0
 $0.0
 $163.0
 Cash and cash equivalents
Liabilities                
Contingent acquisition obligations 1
$0.0
 $0.0
 $147.2
 $147.2
 $0.0
 $0.0
 $160.2
 $160.2
 Accrued liabilities and Other non-current liabilities
                
December 31, 2017 Balance Sheet ClassificationDecember 31, 2018 Balance Sheet Classification
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 
Assets                
Cash equivalents$201.6
 $0.0
 $0.0
 $201.6
 Cash and cash equivalents$132.1
 $0.0
 $0.0
 $132.1
 Cash and cash equivalents
Liabilities                
Contingent acquisition obligations 1
$0.0
 $0.0
 $147.0
 $147.0
 $0.0
 $0.0
 $148.4
 $148.4
 Accrued liabilities and Other non-current liabilities
 
1Contingent acquisition obligations includes deferred acquisition payments and unconditional obligations to purchase additional noncontrolling equity shares of consolidated subsidiaries. Fair value measurement of the obligations is based upon actual and projected operating performance targets as specified in the related agreements. The increase in this balance of $0.2$11.8 from December 31, 20172018 to June 30, 2018March 31, 2019 is primarily due to new acquisitionsvaluation adjustments and option exercises offset by payments.accretion. The amounts payable within the next twelve months are classified in accrued liabilities; any amounts payable thereafter are classified in other non-current liabilities.
Financial Instruments that are not Measured at Fair Value on a Recurring Basis
The following table presents information about our financial instruments that are not measured at fair value on a recurring basis as of June 30, 2018March 31, 2019 and December 31, 20172018, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.
 June 30, 2018 December 31, 2017
 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Total long-term debt$0.0
 $1,250.5
 $40.5
 $1,291.0
 $0.0
 $1,296.4
 $46.2
 $1,342.6
 March 31, 2019 December 31, 2018
 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Total long-term debt$0.0
 $3,717.0
 $40.3
 $3,757.3
 $0.0
 $3,605.6
 $38.0
 $3,643.6
Our long-term debt is comprised of senior notes, a term loan and other notes payable. The fair value of our senior notes, which are traded over-the-counter, is based on quoted prices in markets that are not active. Therefore, these senior notes are classified as Level 2 within the fair value hierarchy. Our term loan is a fixed price commitment that cannot be traded on the open market, and

20
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

therefore is classified as Level 2 within the fair value hierarchy. Our other notes payable are not actively traded, and their fair value is not solely derived from readily observable inputs. The fair value of our other notes payable is determined based on a discounted cash flow model and other

24
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

proprietary valuation methods, and therefore is classified as Level 3 within the fair value hierarchy. See Note 4 for further information on our long-term debt.
Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis, primarily goodwill, intangible assets, and property and equipment. Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic evaluations for potential impairment.

Note 14:15:  Commitments and Contingencies
Legal Matters
We are involved in various legal proceedings, and subject to investigations, inspections, audits, inquiries and similar actions by governmental authorities, arising in the normal course of business. The types of allegations that arise in connection with such legal proceedings may vary in nature, but can include claims related to contract, employment, tax and intellectual property matters. We evaluate all cases each reporting period and record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount, or potential range, of loss can be reasonably estimated. In certain cases, we cannot reasonably estimate the potential loss because, for example, the litigation is in its early stages. While any outcome related to litigation or such governmental proceedings in which we are involved cannot be predicted with certainty, management believes that the outcome of these matters, individually and in the aggregate, will not have a material adverse effect on our financial condition, results of operations or cash flows.
As previously disclosed, on April 10, 2015, a federal judge in Brazil authorized the search of the records of an agency's offices in São Paulo and Brasilia, in connection with an ongoing investigation by Brazilian authorities involving payments potentially connected to local government contracts. The Company had previously investigated the matter and taken a number of remedial and disciplinary actions. The Company has been in the process of concluding a settlement related to these matters with government agencies, and that settlement was fully executed in April 2018. The Company has previously provided for such settlement in its Consolidated Financial Statements.
In December 2016, one of the Company's standalone domestic agencies was contacted by the Department of Justice Antitrust Division for documents regarding video production practices and is cooperating with the government.
Guarantees
As discussed in our 20172018 Annual Report on Form 10-K, we have guaranteed certain obligations of our subsidiaries relating principally to operating leases, uncommitted lines of credit and cash pooling arrangements. As of June 30, 2018March 31, 2019 and December 31, 2017,2018, the amount of parent company guarantees on lease obligations was $823.6$789.9 and $829.2,$824.5, respectively, the amount of parent company guarantees relating to uncommitted lines of credit was $322.7$297.4 and $308.8,$349.1, respectively, and the amount of parent company guarantees related to daylight overdrafts, primarily utilized to manage intra-day overdrafts due to timing of transactions under cash pooling arrangements without resulting in incremental borrowings, was $193.0$209.1 and $182.2,$207.8, respectively.

Note 15:16:  Recent Accounting Standards
Accounting pronouncements not listed below were assessed and determined to be not applicable or are expected to have minimal impact on our Consolidated Financial Statements.
Revenue RecognitionLeases
In February 2016, the Financial Accounting Standards Board ("FASB") issued amended guidance on lease accounting. We adopted the standard using the modified retrospective approach with an effective date of January 1, 2019. Prior-year financial statements were not recast under the new standard. The adoption resulted in the presentation of a right-of-use asset and lease liability on our Consolidated Balance Sheet and corresponding impacts on our Consolidated Statement of Cash Flows, but did not have a significant impact on our Consolidated Statements of Operations. See Notes 2 andNote 3 for further discussion on the adoption of ASC 606.
Derivatives and Hedging
In August 2017, the Financial Accounting Standards Board (the "FASB") issued amended guidance on hedge accounting which expands an entity’s ability to hedge non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The new guidance also eliminates the requirement to separately measure and report hedge ineffectiveness. This amended guidance is effective beginning January 1, 2019, with early adoption permitted. We are currently assessing the impact theour adoption of the amended guidance will have on our Consolidated Financial Statements.

25
Table of Contents
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

new leases standard.
Financial Instrument Credit Losses
In June 2016, the FASB issued amended guidance on the accounting for credit losses on certain types of financial instruments, including trade receivables. The new model uses a forward-looking expected loss method, as opposed to the incurred loss method in current U.S. GAAP, which will generally result in earlier recognition of allowances for losses. This amended guidance is effective beginning January 1, 2020, with early adoption permitted as early as January 1, 2019. We are currently assessing the impact the adoption of the amended guidance will have on our Consolidated Financial Statements.
Leases
In February 2016, the FASB issued amended guidance on lease accounting which requires an entity to recognize a right-of-use asset and a corresponding lease liability on its balance sheet for virtually all of its leases with a term of more than 12 months, including those classified as operating leases. Both the asset and liability will initially be measured at the present value of the future minimum lease payments, with the asset being subject to adjustments such as initial direct costs. Consistent with current U.S. GAAP, the presentation of expenses and cash flows will depend primarily on the classification of the lease as either a finance or an operating lease. The new standard also requires additional quantitative and qualitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases in order to provide additional information about the nature of an organization’s leasing activities. This amended guidance, which will be effective beginning January 1, 2019, requires modified retrospective application, with early adoption permitted. We expect the adoption of this amended guidance to have a significant impact on our Consolidated Balance Sheets but not on our Consolidated Statements of Operations.
Fair Value Measurements
In January 2016, the FASB issued amended guidance that updates the fair value presentation requirements for certain financial instruments. Equity investments with readily determinable fair values, other than those accounted for using the equity method of accounting, will be measured at fair value with changes recorded through current earnings rather than other comprehensive income. This amended guidance was effective January 1, 2018. The adoption of this amended guidance did not have a significant impact on our Consolidated Financial Statements.

Note 16:  Subsequent Events
On July 2, 2018, we entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Acxiom Corporation (“Acxiom”), LiveRamp, Inc., a wholly owned subsidiary of Acxiom, and Acxiom Holdings, Inc. Upon satisfaction of the terms and subject to the conditions set forth in the Purchase Agreement, we will acquire the Acxiom Marketing Solutions business for $2,300.0 in cash, subject to customary adjustments (the “AMS Acquisition”). The consummation of the transaction is subject to customary closing conditions, including, among other things, approval of Acxiom’s stockholders, certain regulatory approvals and completion of a series of internal Acxiom reorganization transactions. The transaction is anticipated to close in the fourth quarter of 2018.
As previously disclosed, we have entered into a commitment letter with Citigroup Global Markets, Inc. (on behalf of various Citi affiliates) and JPMorgan Chase Bank, N.A. (the “Commitment Parties”), dated as of July 2, 2018, pursuant to which, subject to certain terms and conditions, the Commitment Parties have agreed to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to $2,300.0 to fund the consideration for the AMS Acquisition (the "Bridge Facility"). We expect that, prior to the consummation of the AMS Acquisition, we will enter into debt financing arrangements with third-party lenders and engage in debt securities offerings, which will be used to fund the AMS Acquisition and related expenses in lieu of funding under the Bridge Facility. The commitment with respect to the Bridge Facility is subject to certain customary closing conditions, including the consummation of the AMS Acquisition in accordance with the terms of the Purchase Agreement.



Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help you understand The Interpublic Group of Companies, Inc. and its subsidiaries (the "Company," "IPG," "we," "us" or "our"). MD&A should be read in conjunction with our unaudited Consolidated Financial Statements and the accompanying notes included in this report and our 20172018 Annual Report on Form 10-K, as well as our other reports and filings with the Securities and Exchange Commission (the "SEC"). Our Annual Report includes additional information about our significant accounting policies and practices as well as details about the most significant risks and uncertainties associated with our financial and operating results. Our MD&A includes the following sections:
EXECUTIVE SUMMARY provides a discussion about our strategic outlook, factors influencing our business and an overview of our results of operations.
RESULTS OF OPERATIONS provides an analysis of the consolidated and segment results of operations for the periods presented.
LIQUIDITY AND CAPITAL RESOURCES provides an overview of our cash flows, funding requirements, financing and sources of funds, and debt credit ratings.
CRITICAL ACCOUNTING ESTIMATES provides an update to the discussion in our 20172018 Annual Report on Form 10-K of our accounting policies that require critical judgment, assumptions and estimates.
RECENT ACCOUNTING STANDARDS, by reference to Note 1516 to the unaudited Consolidated Financial Statements, provides a discussion of certain accounting standards that have been recently adopted or that have not yet been required to be implemented and may be applicable to our future operations.
NON-GAAP FINANCIAL MEASURE, provides a reconciliation of non-GAAP financial measure with the most directly comparable generally accepted accounting principles in the United States ("U.S. GAAP") financial measures and sets forth the reasons we believe that presentation of the non-GAAP financial measure contained therein provides useful information to investors regarding our results of operations and financial condition.

EXECUTIVE SUMMARY
We are one of the world’s premier global advertising and marketing services companies. Our companies specialize in consumer advertising, digital marketing, media planning and buying, public relations and specialized communications disciplines. Our agencies create customized marketing programs for clients that range in scale from large global marketers to regional and local clients. Comprehensive global services are critical to effectively serve our multinational and local clients in markets throughout the world as they seek to build brands, increase sales of their products and services, and gain market share.
We operate in a media landscape that continues to evolve at a rapid pace. Media channels continue to fragment, and clients face an increasingly complex consumer environment. To stay ahead of these challenges and to achieve our objectives, we have made and continue to make investments in creative and strategic talent in areas including fast-growth digital marketing channels, high-growth geographic regions and strategic world markets. We consistently review opportunities within our Company to enhance our operations through acquisitions and strategic alliances and internal programs that encourage intra-company collaboration. As appropriate, we also develop relationships with technology and emerging media companies that are building leading-edge marketing tools that complement our agencies' skill sets and capabilities.
Our financial goals include competitive organic net revenue growth and operatingexpansion of EBITA margin, expansion,as defined and discussed within the Non-GAAP Financial Measure section of this MD&A, which we expect will further strengthen our balance sheet and total liquidity and increase value to our shareholders. Accordingly, we remain focused on meeting the evolving needs of our clients while concurrently managing our cost structure. We continually seek greater efficiency in the delivery of our services, focusing on more effective resource utilization, including the productivity of our employees, real estate, information technology and shared services, such as finance, human resources and legal. The improvements we have made and continue to make in our financial reporting and business information systems in recent years allow us more timely and actionable insights from our global operations. Our disciplined approach to our balance sheet and liquidity provides us with a solid financial foundation and financial flexibility to manage and grow our business. We believe that our strategy and execution position us to meet our financial goals and to deliver long-term shareholder value.
When we analyze period-to-period changes in our operating performance, we determine the portion of the change that is attributable to changes in foreign currency rates and the net effect of acquisitions and divestitures, and the remainder we call organic change, which indicates how our underlying business performed. We exclude the impact of billable expenses in analyzing our operating performance as the fluctuations from period to period are not indicative of the performance of our underlying

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


businesses and have no impact on our operating incomeEBITA, as defined and discussed within the Non-GAAP Financial Measure section of this MD&A, or net income.
The change in our operating performance attributable to changes in foreign currency rates is determined by converting the prior-period reported results using the current-period exchange rates and comparing these prior-period adjusted amounts to the prior-period reported results. Although the U.S. Dollar is our reporting currency, a substantial portion of our revenues and expenses are generated in foreign currencies. Therefore, our reported results are affected by fluctuations in the currencies in which we

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


conduct our international businesses. Our exposure is mitigated as the majority of our revenues and expenses in any given market are generally denominated in the same currency. Both positive and negative currency fluctuations against the U.S. Dollar affect our consolidated results of operations, and the magnitude of the foreign currency impact to our operations related to each geographic region depends on the significance and operating performance of the region. The foreign currencies that most favorablyadversely impacted our results during the first halfquarter of 20182019 were the Euro and British Pound Sterling.Sterling and Euro.
For purposes of analyzing changes in our operating performance attributable to the net effect of acquisitions and divestitures, transactions are treated as if they occurred on the first day of the quarter during which the transaction occurred. During the past few years, we have acquired companies that we believe will enhance our offerings, including the acquisition of Acxiom (the "Acxiom Acquisition"), and disposed of businesses that are not consistent with our strategic plan.
The metrics that we use to evaluate our financial performance include organic change in net revenue as well as the change in certain operating expenses, and the components thereof, expressed as a percentage of consolidated net revenue. Additionally, inrevenue, as well as EBITA. These metrics are also used by management to assess the financial performance of our operating segments, Integrated Agency Networks ("IAN") and Constituency Management Group ("CMG"). In certain of our discussions, we analyze net revenue by geographic region and by business sector, in which we focus on our top 100 clients, which typically constitute approximately 55% to 60% of our annual consolidated net revenues.
On July 2, 2018, we announced that we entered into a definitive agreement with Acxiom Corporation (“Acxiom”) under which we will acquire the Acxiom Marketing Solutions business unit (the “AMS Business”) in a cash transaction valued at $2,300.0. The transaction is anticipated to close in the fourth quarter of 2018.
The deal combines our media, creative, marketing services and analytics capabilities, global scale and consumer insights with the AMS Business's expertise in data management. The AMS Business will represent approximately 8% of the combined company's net revenues, diversifying IPG's revenue base by client and practice discipline, and adding long-term, contracted revenue streams.
See Note 16 to the unaudited Consolidated Financial Statements and “Liquidity and Capital Resources-Liquidity Outlook-Acquisition of Acxiom Marketing Solutions” below for further details regarding the acquisition.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


The following table presents a summary of our financial performance for the three and six months ended June 30, 2018March 31, 2019 and 2017.2018.
 Three months ended
March 31,		  
Statement of Operations Data2019 2018 
% Increase/
(Decrease)
REVENUE:    

Net revenue$2,004.8
 $1,774.0
 13.0 %
Billable expenses356.4
 395.1
 (9.8)%
Total revenue$2,361.2
 $2,169.1
 8.9 %
      
OPERATING INCOME$50.2
 $38.8
 29.4 %
      
EBITA 1
$71.8
 $44.1
 62.8 %
      
NET LOSS AVAILABLE TO IPG COMMON STOCKHOLDERS$(8.0) $(14.1)  
      
Loss per share available to IPG common stockholders:     
Basic$(0.02) $(0.04)  
Diluted$(0.02) $(0.04)  
      
Operating Ratios     
Organic change in net revenue6.4% 3.6%  
      
Operating margin on net revenue2.5% 2.2%  
Operating margin on total revenue2.1% 1.8%  
      
EBITA margin on net revenue 1
3.6% 2.5%  
      
Expenses as a % of net revenue:     
Salaries and related expenses70.9% 75.0%  
Office and other direct expenses19.4% 18.3%  
Selling, general and administrative expenses2.1% 2.0%  
Depreciation and amortization3.5% 2.6%  
Restructuring charges 2
1.6% 0.0%  
 Three months ended
June 30,		   Six months ended
June 30, 2018		  
Statement of Operations Data2018 2017 
% Increase/
(Decrease)
 2018 2017 
% Increase/
(Decrease)
REVENUE:    

      
Net revenue$1,948.2
 $1,834.6
 6.2% $3,722.2
 $3,509.9
 6.0%
Billable expenses443.6
 351.2
 26.3% 838.7
 739.7
 13.4%
Total revenue$2,391.8
 $2,185.8
 9.4% $4,560.9
 $4,249.6
 7.3%
            
OPERATING INCOME$249.2
 $225.7
 10.4% $288.0
 $260.4
 10.6%
            
NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS$145.8
 $107.7
   $131.7
 $132.4
  
            
Earnings per share available to IPG common stockholders:           
Basic$0.38
 $0.27
   $0.34
 $0.34
  
Diluted$0.37
 $0.27
   $0.34
 $0.33
  
            
Operating Ratios           
Organic change in net revenue5.6%     4.7%    
            
Operating margin on net revenue12.8% 12.3%   7.7% 7.4%  
Operating margin on total revenue10.4% 10.3%   6.3% 6.1%  
            
Expenses as a % of net revenue:           
Salaries and related expenses66.4% 67.0%   70.5% 70.7%  
Office and other direct expenses17.1% 17.4%   17.7% 18.0%  
Selling, general and administrative expenses1.5% 1.1%   1.7% 1.6%  
Depreciation and amortization2.3% 2.3%   2.4% 2.3%  
1
EBITA is a financial measure that is not defined by U.S. GAAP. Refer to the Non-GAAP Financial Measure section of this MD&A for additional information and for a reconciliation to U.S. GAAP measures.
2For the first quarter of 2019, results include restructuring charges of $31.8.
Our organic net revenue increase of 5.6% for the second quarter of 2018 and 4.7%6.4% (which excludes results from Acxiom) for the first halfquarter of 2018 were2019 was driven by growth throughout all geographic regions, primarily attributable to a combination of net client wins and net higher spending from existing clients, and net client wins, most notably in the healthcare, consumer goods and financial services sectors, partially offset by decreases in the food and beverage and technology and telecom sectors. During the secondfirst quarter of 2018,2019, our operatingEBITA margin on net revenue grew to 12.8%3.6% from 12.3% in the prior-year period and during the first half of 2018, our operating margin on net revenue increased to 7.7% from 7.4%2.5% in the prior-year period as the increase in net revenue outpaced the overall increase in our operating expenses,expense, excluding billable expenses.expenses and amortization of acquired intangibles. In the first quarter of 2019, our EBITA margin includes restructuring charges of 1.6% of net revenue.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


RESULTS OF OPERATIONS
Consolidated Results of Operations – Three and Six Months Ended June 30, 2018March 31, 2019 Compared to Three and Six Months Ended June 30, 2017March 31, 2018
Net Revenue
Our net revenue is directly impacted by the retention and spending levels of existing clients and by our ability to win new clients. Most of our expenses are recognized ratably throughout the year and are therefore less seasonal than revenue. Our net revenue is typically lowest in the first quarter and highest in the fourth quarter, reflecting the seasonal spending of our clients.
  Components of Change   Change  Components of Change   Change
Three months ended
June 30, 2017
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
June 30, 2018		Organic TotalThree months ended
March 31, 2018
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
March 31, 2019		Organic Total
Consolidated$1,834.6
 $24.9
 $(14.9) $103.6
 $1,948.2
 5.6% 6.2 %$1,774.0
 $(49.4) $165.8
 $114.4
 $2,004.8
 6.4% 13.0 %
Domestic1,127.6
 0.0
 (8.5) 52.4
 1,171.5
 4.6% 3.9 %1,092.3
 0.0
 160.0
 61.8
 1,314.1
 5.7% 20.3 %
International707.0
 24.9
 (6.4) 51.2
 776.7
 7.2% 9.9 %681.7
 (49.4) 5.8
 52.6
 690.7
 7.7% 1.3 %
United Kingdom141.7
 10.4
 2.8
 20.8
 175.7
 14.7% 24.0 %163.5
 (10.5) 7.9
 9.4
 170.3
 5.7% 4.2 %
Continental Europe154.6
 12.8
 (6.8) 18.1
 178.7
 11.7% 15.6 %158.7
 (12.7) (1.2) 12.0
 156.8
 7.6% (1.2)%
Asia Pacific205.3
 5.3
 (0.2) 3.8
 214.2
 1.9% 4.3 %178.8
 (9.8) 1.0
 8.0
 178.0
 4.5% (0.4)%
Latin America85.7
 (6.5) (1.1) 3.9
 82.0
 4.6% (4.3)%73.9
 (10.8) (0.4) 17.6
 80.3
 23.8% 8.7 %
Other119.7
 2.9
 (1.1) 4.6
 126.1
 3.8% 5.3 %106.8
 (5.6) (1.5) 5.6
 105.3
 5.2% (1.4)%
The 5.7% organic increase during the secondfirst quarter of 20182019 in our domestic market was primarily driven by growth across nearly all disciplines, most notably at our media and advertising businesses. In our international markets, the 7.7% organic increase was driven by growth across all geographic regions and most notably in the United Kingdom and Continental Europe regions,disciplines, primarily at our media and advertising businesses, as well as solid growth at our digital specialist agencies across nearly all geographic regions.
   Components of Change   Change
 Six months ended
June 30, 2017
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Six months ended
June 30, 2018		Organic Total
Consolidated$3,509.9
 $74.4
 $(26.6) $164.5
 $3,722.2
 4.7 % 6.0%
Domestic2,184.7
 0.0
 (18.4) 97.5
 2,263.8
 4.5 % 3.6%
International1,325.2
 74.4
 (8.2) 67.0
 1,458.4
 5.1 % 10.1%
United Kingdom276.9
 26.6
 4.3
 31.4
 339.2
 11.3 % 22.5%
Continental Europe295.5
 33.2
 (9.3) 18.0
 337.4
 6.1 % 14.2%
Asia Pacific379.0
 14.6
 (0.5) (0.1) 393.0
 0.0 % 3.7%
Latin America154.7
 (7.6) (2.4) 11.2
 155.9
 7.2 % 0.8%
Other219.1
 7.6
 (0.3) 6.5
 232.9
 3.0 % 6.3%
The organic increases inbusinesses. Consolidated net acquisitions includes net revenue mostly from Acxiom, which we acquired on October 1, 2018, partially offset by divestitures mostly from our domestic market and international markets were primarily driven by factors similar to those noted above for the second quarter of 2018, as well as a strong performance at our media businesses in the Latin AmericaContinental Europe region.
Refer to the segment discussion later in this MD&A for information on changes in net revenue by segment.
Salaries and Related Expenses
 Three months ended
March 31,		  
 2019 2018 % Increase/
(Decrease)
Salaries and related expenses$1,421.1
 $1,330.3
 6.8%
      
As a % of net revenue:     
Salaries and related expenses70.9% 75.0%  
Base salaries, benefits and tax59.4% 62.3%  
Incentive expense4.7% 4.4%  
Severance expense0.8% 1.6%  
Temporary help4.2% 4.4%  
All other salaries and related expenses1.8% 2.3%  
Net revenue growth of 13.0%, which was discussed in detail above, outpaced the increase in salaries and related expenses of 6.8% during the first quarter of 2019 as compared to the prior-year period, primarily driven by leverage in base salaries, benefits and tax, partially offset by higher incentive expense. Also contributing to the lower percentage was the inclusion of Acxiom, which has a lower ratio of salaries and related expenses as a percentage of its net revenue.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Salaries and Related Expenses
 Three months ended
June 30,		   Six months ended
June 30,		  
 2018 2017 % Increase/
(Decrease)		 2018 2017 % Increase/
(Decrease)
Salaries and related expenses$1,292.9
 $1,228.9
 5.2% $2,623.2
 $2,480.6
 5.7%
            
As a % of net revenue:           
Salaries and related expenses66.4% 67.0%   70.5% 70.7%  
Base salaries, benefits and tax55.8% 57.1%   58.9% 59.6%  
Incentive expense3.2% 2.8%   3.8% 3.7%  
Severance expense1.0% 1.1%   1.3% 1.2%  
Temporary help4.3% 3.9%   4.4% 4.1%  
All other salaries and related expenses2.1% 2.1%   2.1% 2.1%  
Net revenue growth of 6.2% outpaced the increase of salaries and related expenses of 5.2% during the second quarter of 2018 as compared to the prior-year period, primarily driven by leverage in base salaries, benefits and tax, partially offset by higher incentive expense and higher temporary help to support business growth primarily in our domestic market and in the United Kingdom.
Net revenue growth of 6.0% outpaced the increase of salaries and related expenses of 5.7% during the first half of 2018 as compared to the prior-year period. The increase was primarily driven by factors similar to those noted above for the second quarter of 2018.
Office and Other Direct Expenses
Three months ended
June 30,		   Six months ended
June 30,		  Three months ended
March 31,		  
2018 2017 % Increase/
(Decrease)		 2018 2017 % Increase/
(Decrease)		2019 2018 % Increase/
(Decrease)
Office and other direct expenses$333.3
 $318.4
 4.7% $657.1
 $631.1
 4.1%$389.2
 $323.8
 20.2%
                
As a % of net revenue:                
Office and other direct expenses17.1% 17.4%   17.7% 18.0%  19.4% 18.3%  
Occupancy expense6.6% 6.9%   6.9% 7.1%  6.6% 7.2%  
All other office and other direct expenses 1
10.5% 10.5%   10.8% 10.9%  12.8% 11.1%  
 
1Includes client service costs, non-pass through production expenses, travel and entertainment, professional fees, spending to support new business activity, telecommunications, office supplies, bad debt expense, adjustments to contingent acquisition obligations, foreign currency losses (gains) and other expenses.
NetOffice and other direct expenses increased by 20.2% compared to net revenue growth of 6.2% outpaced13.0%, which was discussed in detail above, during the first quarter of 2019 as compared to the prior-year period. The increase in office and other direct expenses was mainly due to the inclusion of Acxiom, which has a higher ratio of office and other direct expenses as a percentage of 4.7% during the second quarter of 2018 as compared to the prior-year period,its net revenue, primarily driven by leverage in occupancy expense.
Net revenue growth of 6.0% outpaced the increase ofclient service costs. Additionally, overall office and other direct expenses of 4.1% during the first half of 2018 as compared to the prior-year period,benefited primarily driven byfrom leverage in occupancy expense.expense and lower new business development costs, partially offset by an increase in year-over-year change in contingent acquisition obligations.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") are primarily the unallocated expenses of our Corporate and other group, as detailed further in the segment discussion later in this MD&A, excluding depreciation and amortization. SG&A as a percentage of net revenue increased to 1.5%remained flat in the secondfirst quarter of 2018 from 1.1% in2019 compared to the prior-year period, primarily as a result of higher incentive expense due to improved financial performance. SG&Aperiod.
Depreciation and Amortization
Depreciation and amortization as a percentage of net revenue increased to 1.7%3.5% in the first halfquarter of 20182019 from 1.6%2.6% in the prior-year period, primarily due to the inclusion of Acxiom.
Restructuring Charges
In the first quarter of 2019, the Company implemented a cost initiative (the “2019 Plan”) to better align our cost structure with our revenue primarily related to specific client losses occurring in 2018, the components of which are listed below.
 Three months ended
March 31, 2019
Severance and termination costs$19.9
Lease impairment costs11.9
Total restructuring charges$31.8
All restructuring actions were identified and initiated by the end of the first quarter of 2019, with all actions expected to be substantially completed by the end of the second quarter of 2019. The 2019 Plan includes a reduction in workforce of 575 employees and costs associated with vacated office space, which we expect will have a positive impact on our 2020 results.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


The following table presents the 2019 Plan restructuring charges and employee headcount reduction for the first three months ended March 31, 2019.
 Restructuring Charges Headcount Reduction (Actual Number)
Domestic$26.2
 458
International5.6
 117
Consolidated$31.8
 575
The 2019 Plan included cost initiatives due to specific client losses, and as such we considered the potential for goodwill impairment at one of our reporting units. While our review did not indicate an impairment triggering event as of March 31, 2019, it did indicate a likely decrease in the excess of fair value over carrying value compared to December 31st, 2018.

EXPENSES AND OTHER INCOME
 Three months ended
March 31,
 2019 2018
Cash interest on debt obligations$(45.6) $(19.5)
Non-cash interest(4.2) (0.4)
Interest expense(49.8) (19.9)
Interest income7.8
 4.0
Net interest expense(42.0) (15.9)
Other expense, net(6.9) (24.4)
Total (expenses) and other income$(48.9) $(40.3)
Net Interest Expense
For the three months ended March 31, 2019, net interest expense increased by $26.1 as compared to the prior-year period, primarily attributable to increased cash interest expense from the issuance of long-term debt in 2018 in order to finance the Acxiom Acquisition.
Other Expense, Net
Results of operations for the three months ended March 31, 2019 and 2018 include certain items that are not directly associated with our revenue-producing operations.
 Three months ended
March 31,
 2019 2018
Net losses on sales of businesses$(8.6) $(24.4)
Other1.7
 0.0
Total other expense, net$(6.9) $(24.4)
Net losses on sales of businesses – During the three months ended March 31, 2019, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of accounts receivable, as held for sale within our IAN reportable segment. During the three months ended March 31, 2018, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of cash, as held for sale within our IAN reportable segment. The businesses held for sale primarily represent unprofitable, non-strategic agencies which are expected to be sold within the next twelve months.


Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


INCOME TAXES
 Three months ended
March 31,
 2019 2018
Income (loss) before income taxes$1.3
 $(1.5)
Provision for income taxes$10.5
 $12.7
Our tax rates are affected by many factors, including our worldwide earnings from various countries, changes in legislation and tax characteristics of our income. For the three months ended March 31, 2019, our seasonally smallest quarter, our income tax provision was driven by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and net losses on sales of businesses, and the classification of certain assets as held for sale, for which we did not receive a tax benefit, partially offset by excess tax benefits on employee share-based payments, the majority of which is typically recognized in the first quarter due to the timing of the vesting of awards.
For the three months ended March 31, 2018, our seasonally smallest quarter, our income tax provision was driven by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and net losses on sales of businesses, and the classification of certain assets as held for sale, for which we did not receive a full tax benefit, partially offset by excess tax benefits on employee share-based payments, the majority of which is typically recognized in the first quarter due to the timing of the vesting of awards.

LOSS PER SHARE
Basic and diluted loss per share available to IPG common stockholders for the three months ended March 31, 2019 were $0.02 compared to $0.04 for the three months ended March 31, 2018. For the three months ended March 31, 2019, this included negative impacts on both basic and diluted loss per share of $0.05 from the amortization of acquired intangibles, $0.06 from restructuring charges, and $0.02 from net losses on sales of businesses and the classification of certain assets as held for sale.
For the three months ended March 31, 2018, this included negative impacts on both basic and diluted loss per share of $0.01 from the amortization of acquired intangibles and $0.06 from net losses on sales of businesses and the classification of certain assets as held for sale.

Segment Results of Operations – Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018
As discussed in Note 13 to the unaudited Consolidated Financial Statements, we have two reportable segments as of March 31, 2019: IAN and CMG. We also report results for the "Corporate and other" group.
IAN
Net Revenue
   Components of Change   Change
 Three months ended
March 31, 2018
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
March 31, 2019		Organic Total
Consolidated$1,481.3
 $(43.1) $164.1
 $108.9
 $1,711.2
 7.4% 15.5%
Domestic898.0
 0.0
 160.8
 60.5
 1,119.3
 6.7% 24.6%
International583.3
 (43.1) 3.3
 48.4
 591.9
 8.3% 1.5%
The organic increase was attributable to a combination of net client wins and net higher spending from existing clients, most notably in the healthcare, consumer goods and financial services sectors. The organic increase in our domestic market was primarily driven by growth at our media and advertising businesses. The international organic increase was driven by growth across all geographic regions and all disciplines, primarily at our media and advertising businesses, most notably in the Latin America and Continental Europe regions. Consolidated net acquisitions includes net revenue mostly from Acxiom, which we acquired on October 1, 2018, partially offset by divestitures mostly from our domestic market and Continental Europe regions.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Segment EBITA
 Three months ended
March 31,		  
 2019 2018 Change
Segment EBITA 1
$114.5
 $61.0
 87.7%
EBITA margin on net revenue 1
6.7% 4.1%  
1
Segment EBITA and EBITA margin on net revenue include $25.6 of restructuring charges in the first quarter of 2019. See "Restructuring Charges" in MD&Aand Note 9 to the Consolidated Financial Statements for the further information.
EBITA margin expanded during the first quarter of 2019 when compared to the first quarter of 2018, as the net revenue growth of 15.5%, which was discussed in detail above, outpaced the increase in operating expenses, excluding billable expenses and amortization of acquired intangibles. The net revenue growth outpaced the increase in salaries and related expenses as compared to the prior period, primarily due to leverage in base salaries, benefits and tax as well as the inclusion of Acxiom, which has a lower ratio of salaries and related expenses as a resultpercentage of higher incentive expenseits net revenue. The increase in office and other direct expenses outpaced the growth in net revenue as compared to the prior-year period, mainly due to improved financial performance.the inclusion of Acxiom, which has a higher ratio of office and other direct expense as a percentage of its net revenue, primarily driven by client service costs. Additionally, overall office and other direct expenses primarily benefited from leverage in occupancy expense and lower new business development costs, partially offset by an increase in year-over-year change in contingent acquisition obligations.
During the first quarter of 2019, segment EBITA includes restructuring charges of $25.6 to better align our cost structure with our revenue.
Depreciation and amortization as a percentage of net revenue increased to 3.7% in the first quarter of 2019 from 2.5% in the prior-year period, primarily due to the inclusion of Acxiom.
CMG
Net Revenue
   Components of Change   Change
 Three months ended
March 31, 2018
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
March 31, 2019		Organic Total
Consolidated$292.7
 $(6.3) $1.7
 $5.5
 $293.6
 1.9% 0.3%
Domestic194.3
 0.0
 (0.8) 1.3
 194.8
 0.7% 0.3%
International98.4
 (6.3) 2.5
 4.2
 98.8
 4.3% 0.4%
The organic increase was primarily attributable to net client wins, most notably in the technology and telecom and healthcare sectors. The organic increase in our domestic market was primarily driven by growth at our public relations agencies. The international organic increase was driven by growth across all geographic regions and most disciplines, primarily at our public relations agencies and sports marketing business, most notably in the United Kingdom.
Segment EBITA
 Three months ended
March 31,		  
 2019 2018 Change
Segment EBITA 1
$1.9
 $20.7
 (90.8)%
EBITA margin on net revenue 1
0.6% 7.1%  
1
Segment EBITA and EBITA margin on net revenue include $5.6 of restructuring charges in the first quarter of 2019. See "Restructuring Charges" in MD&A and Note 9 to the Consolidated Financial Statements for the further information.
EBITA margin decreased during the first quarter of 2019 when compared to the first quarter of 2018, as the increase in operating expenses, excluding billable expenses and amortization of acquired intangibles, primarily driven by restructuring charges of $5.6 to better align our cost structure with our revenue and higher salaries and related expenses to support business growth, outpaced net revenue growth of 0.3%.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Depreciation and Amortization
Depreciation and amortization as a percentage of net revenue relatively remained flat in the secondfirst quarter of 2018 and in the first half of 20182019 as compared to the prior-year periods.

EXPENSES AND OTHER INCOME
 Three months ended
June 30,		 Six months ended
June 30,
 2018 2017 2018 2017
Cash interest on debt obligations$(24.4) $(20.5) $(43.9) $(39.1)
Non-cash interest(1.7) (5.2) (2.1) (7.5)
Interest expense(26.1) (25.7) (46.0) (46.6)
Interest income4.7
 4.7
 8.7
 9.9
Net interest expense(21.4) (21.0) (37.3) (36.7)
Other expense, net(16.3) (15.4) (40.7) (14.6)
Total (expenses) and other income$(37.7) $(36.4) $(78.0) $(51.3)
Other Expense, Net
Results of operations for the three and six months ended June 30, 2018 and 2017 include certain items that are not directly associated with our revenue-producing operations.
 Three months ended
June 30,		 Six months ended
June 30,
 2018 2017 2018 2017
Net losses on sales of businesses$(19.8) $(13.1) $(44.2) $(12.2)
Other3.5
 (2.3) 3.5
 (2.4)
Total other expense, net$(16.3) $(15.4) $(40.7) $(14.6)
Net losses on sales of businesses – During the three and six months ended June 30, 2018 and 2017, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of cash, accounts receivable and accounts payable, as held for sale within our Integrated Agency Networks ("IAN") operating segment.

INCOME TAXES
 Three months ended
June 30,		 Six months ended
June 30,
 2018 2017 2018 2017
Income before income taxes$211.5
 $189.3
 $210.0
 $209.1
Provision for income taxes$63.6
 $81.6
 $76.3
 $81.3
Our tax rates are affected by many factors, including our worldwide earnings from various countries, changes in legislation and tax characteristics of our income. For the three and six months ended June 30, 2018, our effective income tax rates were negatively impacted by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and by losses on sales of businesses, and the classification of certain assets as held for sale, for which we received a minimal tax benefit, partially offset by additional research and development credits based on the conclusion of multi-year studies.
The Tax Cuts and Jobs Act of 2017 imposed a new tax on certain foreign earnings generated in 2018 and forward. These global intangible low-taxed income ("GILTI") tax rules are complex. U.S. GAAP allows us to choose an accounting policy which treats the U.S. tax under GILTI provisions as either a current expense, as incurred, or as a component of the Company’s measurement of deferred taxes. The Company has elected to account for the GILTI tax as a current expense.
For the three and six months ended June 30, 2017, our effective income tax rates were negatively impacted by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and by losses on sales of businesses, and the classification of certain assets as held for sale, for which we did not receive a full tax benefit. For the six months ended June

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


30, 2017, our effective income tax rate was positively impacted by excess tax benefits on employee share-based payments, the majority of which is typically recognized in the first quarter due to the timing of the vesting of awards.

EARNINGS PER SHARE
Basic earnings per share available to IPG common stockholders for the three and six months ended June 30, 2018 were $0.38 and $0.34, respectively, compared to $0.27 and $0.34 for the three and six months ended June 30, 2017, respectively. Diluted earnings per share for the three and six months ended June 30, 2018 were $0.37 and $0.34, respectively, compared to $0.27 and $0.33 for the three and six months ended June 30, 2017, respectively.
For the three and six months ended June 30, 2018, net income available to IPG common stockholders included net losses of $19.8 and $43.8, respectively, on sales of businesses, and the classification of certain assets as held for sale, primarily in our international markets, resulting in a negative impact of $0.05 and $0.11, respectively, on both basic and diluted earnings per share.
For the three and six months ended June 30, 2017, net income available to IPG common stockholders included net losses of $13.1 and $12.2, respectively, on sales of businesses, and the classification of certain assets as held for sale, primarily in our international markets, resulting in a negative impact of $0.03 on basic and diluted earnings per share for both periods.

Segment Results of Operations – Three and Six Months Ended June 30, 2018 Compared to Three and Six Months Ended June 30, 2017
As discussed in Note 12 to the unaudited Consolidated Financial Statements, we have two reportable segments as of June 30, 2018: IAN and Constituency Management Group ("CMG"). We also report results for the "Corporate and other" group.
IAN
Net Revenue
   Components of Change   Change
 Three months ended
June 30, 2017
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
June 30, 2018		Organic Total
Consolidated$1,534.0
 $19.4
 $(16.8) $92.5
 $1,629.1
 6.0% 6.2%
Domestic926.3
 0.0
 (9.1) 46.1
 963.3
 5.0% 4.0%
International607.7
 19.4
 (7.7) 46.4
 665.8
 7.6% 9.6%
The organic increase was primarily attributable to a combination of net higher spending from existing clients and net client wins, most notably in the healthcare sector. The organic increase in our domestic market was driven by growth at our media and advertising businesses. The international organic increase was driven by growth across all geographic regions, most notably in the United Kingdom and Continental Europe regions primarily at our media and advertising businesses as well as solid growth at our digital specialist agencies across nearly all geographic regions.
   Components of Change   Change
 Six months ended
June 30, 2017
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Six months ended
June 30, 2018		Organic Total
Consolidated$2,925.1
 $60.3
 $(26.8) $151.8
 $3,110.4
 5.2% 6.3%
Domestic1,788.3
 0.0
 (17.3) 90.3
 1,861.3
 5.0% 4.1%
International1,136.8
 60.3
 (9.5) 61.5
 1,249.1
 5.4% 9.9%
The organic revenue increases in our domestic and international markets were primarily driven by factors similar to those noted above for the second quarter of 2018, as well as a strong performance at our media businesses in the Latin America region.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Segment Operating Income
 Three months ended
June 30,		   Six months ended
June 30,		  
 2018 2017 Change 2018 2017 Change
Segment operating income$238.2
 $195.9
 21.6% $295.2
 $246.0
 20.0%
Operating margin on net revenue14.6% 12.8%   9.5% 8.4%  
Operating margin expanded during the second quarter of 2018 when compared to the second quarter of 2017, as the net revenue growth of 6.2%, the organic component of which was discussed in detail above, outpaced the increase in operating expenses, excluding billable expenses. The net revenue growth outpaced the increase in salaries and related expenses as compared to the prior period, primarily due to leverage in base salaries, benefits and tax, partially offset by higher temporary help to support business growth, primarily in our domestic market and in the United Kingdom, and higher incentive expense. The growth in net revenue also outpaced the increase in office and other direct expenses as compared to the prior-year period, primarily driven by leverage in occupancy expense. Depreciation and amortization as a percentage of net revenue remained flat as compared to the prior-year period.
Operating margin expanded during the first half of 2018 when compared to the first half of 2017, as the net revenue growth of 6.3%, the organic component of which was discussed in detail above, outpaced the increase in operating expenses, excluding billable expenses, primarily driven by factors similar to those noted above for the second quarter of 2018.
CMG
Net Revenue
   Components of Change   Change
 Three months ended
June 30, 2017
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Three months ended
June 30, 2018		Organic Total
Consolidated$300.6
 $5.5
 $1.9
 $11.1
 $319.1
 3.7% 6.2%
Domestic201.3
 0.0
 0.6
 6.3
 208.2
 3.1% 3.4%
International99.3
 5.5
 1.3
 4.8
 110.9
 4.8% 11.7%
The organic increase was primarily attributable to net client wins, most notably in the technology and telecom sector. The organic increase in our domestic and international markets were driven by growth throughout nearly all disciplines, most notably at our public relations agencies.
   Components of Change   Change
 Six months ended
June 30, 2017
Foreign
Currency
 
Net
Acquisitions/
(Divestitures)
 Organic Six months ended
June 30, 2018		Organic Total
Consolidated$584.8
 $14.1
 $0.2
 $12.7
 $611.8
 2.2% 4.6%
Domestic396.4
 0.0
 (1.1) 7.2
 402.5
 1.8% 1.5%
International188.4
 14.1
 1.3
 5.5
 209.3
 2.9% 11.1%
The organic increase was primarily attributable to net client wins, most notably in the technology and telecom sector. The organic increase in our domestic market was primarily driven by growth at our sports marketing and event businesses, partially offset by declines at our public relations agencies. The organic revenue increase in our international markets was primarily driven by factors similar to those noted above for the second quarter of 2018.
Segment Operating Income
 Three months ended
June 30,		   Six months ended
June 30,		  
 2018 2017 Change 2018 2017 Change
Segment operating income$42.0
 $51.5
 (18.4)% $61.4
 $73.6
 (16.6)%
Operating margin on net revenue13.2% 17.1%   10.0% 12.6%  

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Operating margin decreased during the second quarter of 2018 when compared to the second quarter of 2017, as the increase in operating expenses, excluding billable expenses, primarily driven by the year-over-year change in contingent acquisition obligations, outpaced net revenue growth of 6.2%, the organic component of which was discussed in detail above.
Operating margin decreased during the first half of 2018 when compared to the first half of 2017, as the increase in operating expenses, excluding billable expenses, primarily driven by year-over-year change in adjustments to contingent acquisition obligations, outpaced net revenue growth of 4.6%, the organic component of which was discussed in detail above.
CORPORATE AND OTHER
Corporate and other is primarily comprised of selling, general and administrative expenses including corporate office expenses as well as shared service center and certain other centrally managed expenses that are not fully allocated to operating divisions; salaries, long-term incentives, annual bonuses and other miscellaneous benefits for corporate office employees; professional fees related to internal control compliance, financial statement audits and legal, information technology and other consulting services that are engaged and managed through the corporate office; and rental expense for properties occupied by corporate office employees. Depreciation and amortization primarily relates to the amortization of computer software and the depreciation of leasehold improvements for properties occupied by corporate office employees. A portion of centrally managed expenses is allocated to operating divisions based on a formula that uses the planned revenues of each of the operating units. Amounts allocated also include specific charges for information technology-related projects, which are allocated based on utilization.
Corporate and other expenses increased by $9.3$7.0 to $31.0$44.6 during the secondfirst quarter of 20182019 as compared to the prior-year period. During the first half of 2018, corporateperiod, primarily due to higher incentive expense . Corporate and other expenses increased by $9.4 to $68.6 comparedexpense includes $0.6 of restructuring charges. See "Restructuring Charges" in MD&A and Note 9 to the first half of 2017.Consolidated Financial Statements for the further information.

LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW OVERVIEW
The following tables summarize key financial data relating to our liquidity, capital resources and uses of capital.
Six months ended
June 30,		Three months ended
March 31,
Cash Flow Data2018 20172019 2018
Net income, adjusted to reconcile to net cash used in operating activities 1
$291.6
 $300.5
$86.2
 $73.8
Net cash used in working capital 2
(837.5) (438.6)(165.8) (775.0)
Changes in other non-current assets and liabilities using cash(11.8) (15.0)(13.9) (28.7)
Net cash used in operating activities$(557.7) $(153.1)$(93.5) $(729.9)
Net cash used in investing activities(57.6) (96.0)(30.7) (23.1)
Net cash provided by (used in) financing activities341.0
 (199.4)
Net cash provided by financing activities86.7
 558.2
 
1Reflects net income adjusted primarily for depreciation and amortization of fixed assets and intangible assets, amortization of restricted stock and other non-cash compensation, net losses on sales of businesses and deferred income taxes.
2Reflects changes in accounts receivable, other current assets, accounts payable, accrued liabilities and contract liabilities.
Operating Activities
Due to the seasonality of our business, we typically use cash from working capital in the first nine months of a year, with the largest impact in the first quarter, and generate cash from working capital in the fourth quarter, driven by the seasonally strong media spending by our clients. Quarterly and annual working capital results are impacted by the fluctuating annual media spending budgets of our clients as well as their changing media spending patterns throughout each year across various countries.
The timing of media buying on behalf of our clients across various countries affects our working capital and operating cash flow and can be volatile. In most of our businesses, our agencies enter into commitments to pay production and media costs on behalf of clients. To the extent possible, we pay production and media charges after we have received funds from our clients. The amounts involved, which substantially exceed our revenues, primarily affect the level of accounts receivable, accounts payable, accrued liabilities and contract liabilities. Our assets include both cash received and accounts receivable from clients for these pass-through arrangements, while our liabilities include amounts owed on behalf of clients to media and production suppliers. Our accrued liabilities are also affected by the timing of certain other payments. For example, while annual cash incentive awards are accrued throughout the year, they are generally paid during the first quarter of the subsequent year.
Net cash used in operating activities during the first quarter of 2019 was $93.5, which was a decrease of $636.4 as compared to the first quarter of 2018, primarily as a result of a decrease in working capital usage of $609.2. Working capital in the first quarter of 2019 was an unseasonably low use, which benefited from the timing of sizable cash collections that were received in the first quarter of 2019 versus the fourth quarter of 2018, primarily attributable to our media businesses.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Net cash used in operating activities during the first half of 2018 was $557.7, which was an increase of $404.6 as compared to the first half of 2017, primarily as a result of an increase in working capital usage of $398.9. Working capital in 2017 benefited from the spending patterns of our clients compared to 2018. The working capital usage in both periods was primarily attributable to our media businesses.
Investing Activities
Net cash used in investing activities during the first halfquarter of 20182019 primarily consisted of payments for capital expenditures of $61.5,$32.8, related mostly to leasehold improvements and computer software and hardware.
Financing Activities
Net cash provided by financing activities during the first halfquarter of 20182019 was driven by an increase in short-term borrowings of $669.3, primarily$201.0, related mostly to an increase of outstanding commercial paper, partially offset by the payment of dividends of $161.2 and the repurchase of 5.0 shares of our common stock for an aggregate cost of $114.5, including fees.$90.6.
Foreign Exchange Rate Changes
The effect of foreign exchange rate changes on cash, cash equivalents and restricted cash included in the unaudited Consolidated Statements of Cash Flows resulted in a net decrease of $27.5$6.4 during the first halfquarter of 2018.2019.
LIQUIDITY OUTLOOK
We expect our cash flow from operations and existing cash and cash equivalents to be sufficient to meet our anticipated operating requirements at a minimum for the next twelve months. We also have a committed corporate credit facility as well as uncommitted lines of credit and a commercial paper program available to support our operating needs. We continue to maintain a disciplined approach to managing liquidity, with flexibility over significant uses of cash, including our capital expenditures, cash used for new acquisitions, our common stock repurchase program and our common stock dividends.
From time to time, we evaluate market conditions and financing alternatives for opportunities to raise additional funds or otherwise improve our liquidity profile, enhance our financial flexibility and manage market risk. Our ability to access the capital markets depends on a number of factors, which include those specific to us, such as our credit ratings, and those related to the financial markets, such as the amount or terms of available credit. There can be no guarantee that we would be able to access new sources of liquidity, or continue to access existing sources of liquidity, on commercially reasonable terms, or at all.
Funding Requirements
Our most significant funding requirements include our operations, non-cancelable operating lease obligations, capital expenditures, acquisitions, common stock dividends, taxes, restructuring, and debt service. Additionally, we may be required to make payments to minority shareholders in certain subsidiaries if they exercise their options to sell us their equity interests.
Notable funding requirements include:
Debt service – As of June 30, 2018,March 31, 2019, we had outstanding short-term borrowings of $757.6$272.4 primarily from our commercial paper program and uncommitted lines of credit and commercial paper program used primarily to fund seasonal working capital needs. The remainder of our debt is primarily long-term, with maturities scheduled from 20222020 through 2024.2048.
AMS Acquisition – In connection with the AMS Acquisition (as defined below), we are required to make a cash payment of $2,300.0 at the closing of the transaction, which is currently expected to occur in the fourth quarter of 2018. We have entered into a commitment letter under which the lenders have agreed to provide a bridge loan in an aggregate principal amount of up to $2,300.0 to fund the consideration for the acquisition. We expect that, prior to the consummation of the AMS Acquisition, we will enter into debt financing arrangements with third-party lenders and engage in debt securities offerings, which will be used to fund the AMS Acquisition in lieu of any bridge loans.
Other Acquisitions – We paid cash of $8.3, net of cash acquired of $0.4, for acquisitions completed in the first half of 2018. We also paid $0.2 in up-front payments and $34.2$0.5 in deferred payments for prior acquisitions as well as ownership increases in our consolidated subsidiaries. In addition to potential cash expenditures for new acquisitions, we expect to pay approximately $65.0$77.0 over the next twelve months related to prior acquisitions. We may also be required to pay approximately $4.0$2.0 related to put options held by minority shareholders if exercised over the next twelve months. We will continue to evaluate strategic opportunities to grow and continue to strengthen our market position, particularly in our digital and marketing services offerings, and to expand our presence in high-growth and key strategic world markets.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Dividends – In the first halfquarter of 2018,2019, we paid a quarterly cash dividend of $0.21$0.235 per share on our common stock, which corresponded to a dividend payment of $161.2.$90.6. Assuming we continue to pay a quarterly dividend of $0.21$0.235 per share, and there is no significant change in the number of outstanding shares as of June 30, 2018,March 31, 2019, we would expect to pay approximately $321.0$363.0 over the next twelve months.
Acquisition of Acxiom Marketing Solutions
On July 2, 2018, we entered into a Membership Interest Purchase Agreement under the terms of which we will acquire the Acxiom Marketing Solutions business from Acxiom Corporation for $2,300.0 in cash, subject to customary adjustments (the “AMS Acquisition”). The transaction is subject to customary closing conditions, including, among other things, approval of Acxiom’s stockholders, certain regulatory approvals and completion of a series of internal Acxiom reorganization transactions. The transaction is anticipated to close in the fourth quarter of 2018.
As previously disclosed, we have entered into a commitment letter with Citigroup Global Markets, Inc. (on behalf of various Citi affiliates) and JPMorgan Chase Bank, N.A. (the “Commitment Parties”), dated as of July 2, 2018, pursuant to which, subject to certain terms and conditions, the Commitment Parties have agreed to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to $2,300.0  to fund the consideration for the AMS Acquisition. We expect that, prior to the consummation of the AMS Acquisition, we will enter into debt financing arrangements with third-party lenders and engage in debt securities offerings, which will be used to fund the AMS Acquisition and related expenses in lieu of funding under any bridge loans. There can be no guarantee that we will be able to access these sources of financing on commercially reasonable terms, or at all.
While our second quarter results include only a small amount of expenses related to this transaction, we anticipate that one-time transaction-related expenses will be greater in our third quarter. The indebtedness we expect to incur to fund the AMS Acquisition will significantly increase our outstanding debt levels and corresponding interest expense.
For further information on the AMS Acquisition, see Note 16 to the unaudited Consolidated Financial Statements.
Share Repurchase Program
In February 2018, our Board of Directors (the "Board") authorized a new share repurchase program to repurchase from time to time up to $300.0, excluding fees, of our common stock, which was in addition to the remaining amount available to be repurchased from the $300.0 authorization made by the Board in February 2017. As of June 30, 2018, $341.0, excluding fees, remains available for repurchase under the share repurchase programs. The share repurchase programs have no expiration date.
We may effect such repurchases through open market purchases, trading plans established in accordance with SEC rules, derivative transactions or other means. On July 2, 2018, in connection with the announcement of the AMSAcxiom Acquisition, we announced that share repurchases will be suspended for a period of time in order to reduce the increased debt levels expectedincurred in conjunction with the AMS acquisition. As of March 31, 2019, $338.4, excluding fees, remains available for repurchase under the share repurchase programs authorized in previous years, which have no expiration date.
FINANCING AND SOURCES OF FUNDS
Substantially all of our operating cash flow is generated by our agencies. Our cash balances are held in numerous jurisdictions throughout the world, including at the holding company level. Below is a summary of our sources of liquidity.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


Credit Agreements
We maintain a committed corporate credit facility, originally dated as of July 18, 2008, which has been amended and restated from time to time (the "Credit Agreement"). We use our Credit Agreement to increase our financial flexibility, to provide letters of credit primarily to support obligations of our subsidiaries and to support our commercial paper program. The Credit Agreement is a revolving facility, expiring in October 2022, under which amounts borrowed by us or any of our subsidiaries designated under the Credit Agreement may be repaid and reborrowed, subject to an aggregate lending limit of $1,500.0, or the equivalent in other currencies. The Company has the ability to increase the commitments under the Credit Agreement from time to time by an additional amount of up to $250.0, provided the Company receives commitments for such increases and satisfies certain other conditions. The aggregate available amount of letters of credit outstanding may decrease or increase, subject to a sublimit on letters of credit of $50.0, or the equivalent in other currencies. Our obligations under the Credit Agreement are unsecured. As of June 30, 2018,March 31, 2019, there were no borrowings under the Credit Agreement; however, we had $8.5$8.7 of letters of credit under the Credit Agreement, which reduced our total availability to $1,491.5.$1,491.3.
We were in compliance with all of our covenants in the Credit Agreement as of June 30, 2018.March 31, 2019. The financial covenants in the Credit Agreement require that we maintain, as of the end of each fiscal quarter, certain financial measures for the four quarters then ended. The table below sets forth the financial covenants in effect as of June 30, 2018.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


March 31, 2019.
 Four Quarters Ended Four Quarters Ended Four Quarters Ended Four Quarters Ended
Financial Covenants June 30, 2018 EBITDA Reconciliation June 30, 2018 March 31, 2019 EBITDA Reconciliation March 31, 2019
Interest coverage ratio (not less than) 1
 5.00x Operating income $966.0
 5.00x Operating income $1,083.4
Actual interest coverage ratio 16.55x Add:   8.01x Add:  
Leverage ratio (not greater than) 1
 3.50x Depreciation and amortization 258.9
 4.00x Depreciation and amortization 332.8
Actual leverage ratio 1.67x 
EBITDA 1
 $1,224.9
 2.78x 
EBITDA 1
 $1,416.2
 
1The interest coverage ratio is defined as EBITDA, as defined in the Credit Agreement and the Term Loan Agreement, to net interest expense for the four quarters then ended. The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA for the four quarters then ended. The inclusion of Acxiom results, as required per the Credit Agreement and the Term Loan Agreement, did not impact compliance with our covenants.
We also have uncommitted lines of credit with various banks whichthat permit borrowings at variable interest rates and whichthat are primarily used to fund working capital needs. We have guaranteed the repayment of some of these borrowings made by certain subsidiaries. If we lose access to these credit lines, we would have to provide funding directly to some of our operations. As of June 30, 2018,March 31, 2019, the Company had uncommitted lines of credit in an aggregate amount of $1,127.0,$1,112.7, under which we had outstanding borrowings of $81.6$69.9 classified as short-term borrowings on our Consolidated Balance Sheet. The average amount outstanding during the secondfirst quarter of 20182019 was $94.0,$102.9, with a weighted-average interest rate of approximately 4.8%4.3%.
Commercial Paper
We have a commercial paper program under which theThe Company is authorized to issue unsecured commercial paper up to a maximum aggregate amount outstanding at any time of $1,500.0. Borrowings under the program are supported by the Credit Agreement described above. Proceeds of the commercial paper are used for working capital and general corporate purposes, including the repayment of maturing indebtedness and other short-term liquidity needs. The maturities of the commercial paper vary but may not exceed 397 days from the date of issue. As of June 30, 2018,March 31, 2019, there was $676.0$202.5 of commercial paper outstanding. The average amount outstanding under the program during the secondfirst quarter of 20182019 was $988.0,$154.7, with a weighted-average interest rate of 2.5%2.8% and a weighted-average maturity of thirtythirteen days.
Cash Pooling
We aggregate our domestic cash position on a daily basis. Outside the United States, we use cash pooling arrangements with banks to help manage our liquidity requirements. In these pooling arrangements, several IPG agencies agree with a single bank that the cash balances of any of the agencies with the bank will be subject to a full right of set-off against amounts other agencies owe the bank, and the bank provides for overdrafts as long as the net balance for all agencies does not exceed an agreed-upon level. Typically, each agency pays interest on outstanding overdrafts and receives interest on cash balances. Our unaudited Consolidated Balance Sheets reflect cash, net of bank overdrafts, under all of our pooling arrangements, and as of June 30, 2018,March 31, 2019, the amount netted was $2,251.3.$2,055.7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


DEBT CREDIT RATINGS
Our debt credit ratings as of July 16, 2018,April 15, 2019, are listed below.
 Moody’s Investors Service S&P Global Ratings Fitch Ratings
Short-term ratingP-2 A-2 F2
Long-term ratingBaa2 BBB BBB+
OutlookUnder ReviewStable Negative NegativeStable
We are rated investment-grade by Moody's Investors Service, S&P Global Ratings and Fitch Ratings. The most recent update to our outlook occurred in July 2018 when Moody's Investors Service changed from Stable to Under Review, and S&P Global Ratings and Fitch Ratings changed from Stable to Negative. Moody's Investors Service placed both short-term and long-term ratings on review for downgrade, S&P Global Ratings placed both short-term and long-term ratings on CreditWatch with negative implications and Fitch Ratings placed long-term rating on Rating Watch Negative. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning credit rating agency. The rating of each credit rating agency should be evaluated independently of any other rating. Credit ratings could have an impact on liquidity, either adverse or favorable, because, among other things, they could affect funding costs in the capital markets or otherwise. For example, our Credit Agreement fees and borrowing rates are based on a credit ratings grid.grid, and our access to the commercial paper market is contingent on our maintenance of sufficient short-term debt ratings.


Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements for the year ended December 31, 20172018, included in our 20172018 Annual Report on Form 10-K. As summarized in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report, we believe that certain of these policies are critical because they are important to the presentation of our financial condition and results of operations, and they require management’s most difficult, subjective or complex judgments, often as a result of the need to estimate the effect of matters that are inherently uncertain. These critical estimates relate to revenue recognition, income taxes, goodwill and other intangible assets, and pension and postretirement benefits. We base our estimates on historical experience and various other factors that we believe to be relevant under the circumstances. Estimation methodologies are applied consistently from year to year, and there have been no significant changes in the application of critical accounting estimates since December 31, 20172018 other than those in connection with the adoption of the new revenue standard as detailed in Note 2.. Actual results may differ from these estimates under different assumptions or conditions.
RECENT ACCOUNTING STANDARDS
See Note 1516 to the unaudited Consolidated Financial Statements for further information on certain accounting standards that have been recently adopted or that have not yet been required to be implemented and may be applicable to our future operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


NON-GAAP FINANCIAL MEASURE
This MD&A includes both financial measures in accordance with U.S. GAAP, as well as a non-GAAP financial measure. The non-GAAP financial measure represents Net Loss Available to IPG Common Stockholders before Provision for Income Taxes, Total (Expenses) and Other Income, Equity in Net Loss of Unconsolidated Affiliates, Net Loss Attributable to Noncontrolling Interests and Amortization of Acquired Intangibles which we refer to as “EBITA”.
EBITA should be viewed as supplemental to, and not as an alternative for Net Loss Available to IPG Common Stockholders calculated in accordance with U.S. GAAP ("net income") or operating income calculated in accordance with U.S. GAAP ("operating income"). This section also includes reconciliation of this non-GAAP financial measure to the most directly comparable U.S. GAAP financial measures, as presented below.
EBITA is used by our management as an additional measure of our Company’s performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of EBITA help our management identify additional trends in our company’s financial results that may not be shown solely by period-to-period comparisons of net income or operating income. In addition, we may use EBITA in the incentive compensation programs applicable to some of our employees in order to evaluate our Company’s performance. Our management recognizes that EBITA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. Management also reviews operating and net income as well as the specific items that are excluded from EBITA, but included in net income or operating income, as well as trends in those items. The amounts of those items are set forth, for the applicable periods, in the reconciliation of EBITA to net income that accompany our disclosure documents containing non-GAAP financial measures, including the reconciliations contained in this MD&A.
We believe that the presentation of EBITA is useful to investors in their analysis of our results for reasons similar to the reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by management in light of the performance metrics used in making those decisions. In addition, as more fully described below, we believe that providing EBITA, together with a reconciliation of this non-GAAP financial measure to net income, helps investors make comparisons between our Company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. However, EBITA is intended to provide a supplemental way of comparing our Company with other public companies and is not intended as a substitute for comparisons based on net income or operating income. In making any comparisons to other companies, investors need to be aware that companies may use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding U.S. GAAP measures provided by each company under the applicable rules of the SEC.
The following is an explanation of the items excluded by us from EBITA but included in net loss:
Total (Expense) and Other Income, Provision for Income Taxes, Equity in Net Loss Income of Unconsolidated Affiliates and Net Loss Attributable to Noncontolling Interests. We exclude these items (i) because these items are not directly attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that these items will recur in future periods.

Amortization of Acquired Intangibles. Amortization of acquired intangibles is a non-cash expense relating to intangible assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related assets. We exclude amortization of acquired intangibles because we believe that (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets. Accordingly, we believe that this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that the use of intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense may recur in future periods.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - (continued)
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)


The following table presents the reconciliation of Net Loss Available to IPG Common Stockholders to EBITA for the first quarter of 2019 and 2018.
 Three months ended
March 31,
 2019 2018
    
Net Revenue$2,004.8
 $1,774.0
    
EBITA Reconciliation:   
Net Loss Available to IPG Common Stockholders 1
$(8.0) $(14.1)
    
Add Back:   
Provision for Income Taxes10.5
 12.7
Subtract:   
Total (Expenses) and Other Income(48.9) (40.3)
Equity in Net Loss of Unconsolidated Affiliates(0.3) (1.9)
Net Loss Attributable to Noncontrolling Interests1.5
 2.0
Operating Income 1
50.2
 38.8
    
Add Back:   
Amortization of Acquired Intangibles21.6
 5.3
    
EBITA 1
$71.8
 $44.1
EBITA Margin on Net Revenue 1
3.6% 2.5%
1In 2019, calculations include restructuring charges of $31.8.

Item 3.Quantitative and Qualitative Disclosures about Market Risk
In the normal course of business, we are exposed to market risks related to interest rates, foreign currency rates and certain balance sheet items. There has been no significant change in our exposure to market risk during the first halfquarter of 2018.2019. Our exposure to market risk for changes in interest rates primarily relates to the fair market value and cash flows of our debt obligations. As of June 30, 2018March 31, 2019, and December 31, 2017,2018, approximately 61%82% and 94%86%, respectively, of our debt obligations bore fixed interest rates. We have, from time to time, used interest rate swaps for risk management purposes to manage our exposure to changes in interest rates. We do not have any interest rate swaps outstanding as of June 30, 2018March 31, 2019. For further discussion of our exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our 20172018 Annual Report on Form 10-K.

Item 4.Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2018March 31, 2019, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Changes in Internal Control Over Financial Reporting
There has been no change in internal control over financial reporting in the quarter ended June 30, 2018,March 31, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION
Item 1.Legal Proceedings
Information about our legal proceedings is set forth in Note 1415 to the unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Item 1A.Risk Factors
In addition to the other information set forthfirst quarter of 2019, there have been no material changes in this report, you should carefully consider the risk factors discussedwe have previously disclosed in Item 1A, Risk Factors,, in our 20172018 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. For example, these risks now include the Company’s ability to successfully complete the pending acquisition of the AMS Business (as defined below), including timely receipt of all stockholder and regulatory approvals, and realization of the anticipated benefits of the transaction. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results. The Risk Factors included in our 2017 Annual Report on Form 10-K have not materially changed other than as set forth below.10-K.

We may fail to complete the proposed acquisition of the Acxiom Marketing Solutions business (the “AMS Business”) from Acxiom Corporation (“Acxiom”) and, even if the acquisition is successfully completed, the anticipated benefits to our stockholders may not be realized.

On July 2, 2018, we entered into a Membership Interest Purchase Agreement under the terms of which we will acquire the AMS Business for $2.3 billion in cash (the “AMS Acquisition”). The transaction is subject to customary closing conditions, including, among other things, approval of Acxiom’s stockholders, certain regulatory approvals and completion of a series of internal Acxiom reorganization transactions.
There can be no assurance that Acxiom’s stockholders or the relevant regulators will approve the AMS Acquisition or that the other closing conditions will be satisfied. If the AMS Acquisition is not completed for any reason, we will be subject to risks, including the following:
•the current market price of our common stock may reflect a market assumption that the Acquisition will occur, and a failure to complete the AMS Acquisition could result in a decline in the market price of our common stock;
•we expect to incur substantial transaction costs relating to the AMS Acquisition (including significant legal, accounting and financial advisory fees), and these substantial costs may not be recoverable by us;
•we may experience disruption to our business, including the diversion of our management and employees from day-to-day operations because of matters related to the AMS Acquisition (including integration planning), which could also adversely affect our results of operations.
Moreover, uncertainty arising during the pendency of the AMS Acquisition, including as a result of any delays in obtaining required approvals for any reason, could negatively impact the AMS Business’s relationships with its clients.
In the event that the proposed AMS Acquisition is successfully completed, there can be no assurance that the anticipated benefits to our stockholders will be realized if the AMS Business fails to perform as expected. Failure to realize the benefits of the AMS Acquisition could negatively impact our stock price and our future business and financial results after the AMS Acquisition.

If completed, following the AMS Acquisition, we will have a substantial amount of additional debt, and the cost of servicing that debt could adversely affect our business.

We intend to finance the purchase price and related transaction expenses with debt financing. The indebtedness we expect to incur to fund the AMS Acquisition will significantly increase our outstanding debt levels and will require us to dedicate a substantial portion of our cash flow to servicing this debt, thereby reducing the availability of cash to fund other business initiatives. If we are unable to generate sufficient funds to meet our obligations under our existing or new credit facilities and any debt securities we issue in connection with the AMS Acquisition, we may be required to refinance, restructure or otherwise amend some or all of our obligations, sell assets or raise additional cash through the sale of our common stock or convertible securities. We cannot assure you that we would be able to obtain refinancing on terms as favorable as our current financing or that any restructuring, sales of assets or issuances of equity can be accomplished or, if accomplished, would raise sufficient funds to meet our obligations. If we were to raise additional funds through the issuance of equity or convertible securities, that issuance could also result in substantial dilution to existing stockholders.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
(c)The following table provides information regarding our purchases of our equity securities during the period from AprilJanuary 1, 20182019 to June 30, 2018:March 31, 2019:
 
Total Number of Shares (or Units) Purchased 1
 
Average Price Paid
per Share (or Unit) 2
 
Total Number of Shares (or Units) Purchased as Part of
Publicly Announced
Plans or Programs 3
 
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs 3
April 1 - 30747,893
 $23.48
 745,219
 $383,101,087
May 1 - 31800,013
 $23.50
 795,555
 $364,402,162
June 1 - 301,017,301
 $23.31
 1,003,502
 $341,010,444
Total2,565,207
 $23.42
 2,544,276
  
 
Total Number of Shares (or Units) Purchased 1
 
Average Price Paid
per Share (or Unit) 2
 
Total Number of Shares (or Units) Purchased as Part of
Publicly Announced
Plans or Programs 3
 
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs 3
January 1 - 317,227
 $22.65
 —
 $338,421,933
February 1 - 28958,835
 $22.89
 —
 $338,421,933
March 1 - 31880
 $20.93
 —
 $338,421,933
Total966,942
 $22.89
 —
  
 
1IncludedThe total number of shares of our common stock, par value $0.10 per share, purchased were withheld under the terms of grants under employee stock-based compensation plans to offset tax withholding obligations that arose upon vesting and release of restricted shares (the “Withheld Shares”"Withheld Shares"). We repurchased 2,674 Withheld Shares in April 2018, 4,458 Withheld Shares in May 2018 and 13,799 Withheld Shares in June 2018, for a total of 20,931 Withheld Shares during the three-month period.
2The average price per share for each of the months in the fiscal quarter and for the three monththree-month period was calculated by dividing (a) the sum forin the applicable period of the aggregate value of the tax withholding obligations and the aggregate amount we paid for shares acquired under our share repurchase programs, described in Note 7 to the unaudited Consolidated Financial Statements, by (b) the sum of the number of Withheld Shares and the number of shares acquired in our share repurchase programs.Shares.
3OnIn February 14, 2018, we announced that our2017, the Company's Board of Directors had approved(the "Board") authorized a new share repurchase program to repurchase from time to time up to $300.0 million, excluding fees, of our common stock (the "2017 Share Repurchase Program"). In February 2018, the Board authorized a share repurchase program to repurchase from time to time up to $300.0 million, excluding fees, of our common stock, which was in addition to any amounts available on existing authorizations. There is no expiration date associated withremaining under the share repurchase programs.2017 Share Repurchase Program. On July 2, 2018, in connection with the announcement of the acquisition of the Acxiom Marketing Solutions business,Acquisition, we announced that share repurchases will be suspended for a period of time in order to reduce the increased debt levels expectedincurred in conjunction with the AMS acquisition.acquisition, and no shares were repurchased pursuant to the share repurchase programs in the periods reflected. There are no expiration dates associated with the share repurchase programs.

Item 6.Exhibits
All exhibits required pursuant to Item 601 of Regulation S-K to be filed as part of this report or incorporated herein by reference to other documents, are listed in the Index to Exhibits below.

INDEX TO EXHIBITS
Exhibit No. Description
   
2.1
10(iii)(A)(1)
 
Membership Interest PurchaseEmployment Agreement between the Company and Ellen Johnson dated as of July 2, 2018, by and among Acxiom Corporation, The Interpublic Group of Companies, Inc. (the “Company”), LiveRamp, Inc. and Acxiom Holdings, Inc., is incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of the Company which was filed with the Securities and Exchange Commission on July 6, 2018.April 1, 2004.

   
12.110(iii)(A)(2)
 ComputationSupplemental Employment Agreement between the Company and Ellen Johnson dated September 22, 2004.
10(iii)(A)(3)
Amendment to Employment Agreement between the Company and Ellen Johnson dated as of RatiosMarch 4, 2008.

10(iii)(A)(4)
Executive Change of Earnings to Fixed Charges.Control Agreement between the Company and Ellen Johnson dated as of May 27, 2010.

10(iii)(A)(5)
Extension of Existing Executive Change of Control Agreement between the Company and Ellen Johnson dated August 29, 2013.

10(iii)(A)(6)
Extension of Existing Executive Change of Control Agreement between the Company and Ellen Johnson dated October 26, 2016.

   
31.1
 Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
   
31.2
 Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
   
32
 Certification of the Chief Executive Officer and the Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350 and Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended.
   
101 Interactive Data File, for the period ended June 30, 2018.March 31, 2019.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
   
 THE INTERPUBLIC GROUP OF COMPANIES, INC.
   
 By
/s/ Michael I. Roth
  
Michael I. Roth
Chairman and Chief Executive Officer
Date: July 25, 2018April 26, 2019
 
   
   
 By
/s/ Christopher F. Carroll
  
Christopher F. Carroll
Senior Vice President, Controller and
Chief Accounting Officer
(Principal Accounting Officer)
Date: July 25, 2018April 26, 2019

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